Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

ABERYSTWYTH HARBOUR BILL

LONDON DOCKLANDS RAILWAY (CITY EXTENSION) BILL

Orders for Third Reading read.

Queen's Consent, on behalf of the Crown, signified.

Read the Third time, and passed.

ESSEX BILL [Lords]

Read a Second time, and committed.

FELIXSTOWE DOCK AND RAILWAY BILL (By Order)

Order for consideration read.

To be considered upon Monday 14 July at Seven o'clock.

TEIGNMOUTH QUAY COMPANY BILL

Order for Second Reading read.

To be read a Second time upon Thursday 17 July.

BEXLEY LONDON BOROUGH COUNCIL BILL (By Order)

Order for Second Reading read.

To he read a Second time upon Tuesday 15 July at Seven o'clock.

SHOREHAM PORT AUTHORITY BILL (By Order)

PLYMOUTH CITY COUNCIL BILL [Lords] (Br Order)

Orders for Second Reading read.

To he read a Second time upon Thursday 17 July.

WESTERN ISLES ISLANDS COUNCIL (BERNERAY HARBOUR)

Mr. Secretary Rifkind presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Western Isles Islands Council (Berneray Harbour); And the same was read the First time; and ordered to be considered upon Wednesday 16 July and to be printed. [Bill 204.]

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

Sheep

Mr. Kennedy: asked the Minister of Agriculture, Fisheries and Food if he is yet in a position to announce details of compensation for farmers affected by the recent controls on the movement and slaughter of sheep; and if he will make a statement.

Mr. Ray Powell: asked the Minister of Agriculture, Fisheries and Food when he expects to consider the payment of compensation to sheep farmers who have suffered losses as a result of the measures announced on 20 June.

The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): My colleagues and I have had discussions with the farmers unions on the compensation issue. We have agreed that, as yet, it is too early to assess the overall impact on producers of the restrictions, since that will depend upon the relationship between the length of time the restrictions are in operation and the individual farmer's marketing patterns. In this connection, I am happy to announce that my right hon. Friend the Secretary of State for Wales and I have today signed another order to come into effect at midnight to release a further area of Cumbria from the restrictions. I understand that he will be making a similar announcement today, in relation to further areas in Wales. These releases are based on the results of intensive monitoring, which is continuing. Full details of the area, and the results of latest tests, are being published today and a copy is being placed in the Library of the House.

Mr. Kennedy: In thanking the Minister for that informative reply, may I stress to him that in my constituency in Easter Ross, which obviously and understandably will not be covered by the decisions that he is making today, we have the continuing difficulties of last year's bad weather, a 75 per cent. fall in farm incomes and, within the past 48 hours, confirmation from Lord Gray of a further increase in Scottish farming indebtedness to the banks of 9 per cent.? Given those difficulties, and appreciating what the Minister said, may I urge him to take all possible steps as arid when sufficient evidence becomes available to help compensate those farmers, who are already suffering badly at the margins and who will be plunged even further into indebtedness, because the survival of the whole rural economy in the highlands of Scotland is dependent on their well being? Can the Minister give us that undertaking?

Mr. Jopling: I have listened to the hon. Gentleman. Many of his points are matters for my right hon. arid learned Friend the Secretary of State for Scotland. I remind him that I said on 20 June that we were prepared to discuss cases of compensation for severe loss in particular circumstances to specific farmers. That undertaking still stands.

Mr. Powell: That is not all that helpful to farmers. Recently we have also had discussions with the farmers union, and the farmers want to know the Government's criteria on compensation. When will the Government


make a statement on that? Is the Minister suggesting that the Secretary of State for Wales may be making that statement somewhere else, because he should be present on the Front Bench if it is a measure affecting Wales? Is the Minister aware that in Wales the scare is so great that a butcher in Monmouth must use a geiger counter to sell lamb in his shop? Is it not time that the Government came clean and told farmers how they will compensate them and the criteria that they will lay down?

Mr. Jopling: The hon. Gentleman should be a little careful before he starts making irresponsible statements of that sort. Questions today are for my Department and not for the Welsh Office. I shall repeat to him—he probably was not listening when I said it earlier—that the leaders of the farmers unions in England and Wales have recognised that until more data are available it is not possible to consider the compensation question in detail. I accept the importance that they attach to early decisions as soon as sufficient data are available.

Mrs. Kellett-Bowman: Will my right hon. Friend accept that we appreciate that he is concerned about the serious economic plight of many farmers in our part of the world? Will he deplore, as he did partly in his answer, the scaremongering that may lead people to cease to buy lamb which is perfectly safe? Will he continue to press the Russians, who are responsible for this disaster, to cough up some cash?

Mr. Jopling: I am glad that my hon. Friend has drawn attention to the perfect safety of consuming sheepmeat at this time. I believe that the British housewife has demonstrated that clearly because the market price for lamb, both last week and, as we forecast, this week, is rather higher than it was in the corresponding weeks last year. With regard to the points my hon. Friend made about the Russians, I warned Mr. Murakhousky when he was here last week of concern about the impact of the Chernobyl disaster on our agriculture. Of course, any matter of claims is one for the Foreign Office, and not for me.

Mr. Nicholas Winterton: Will my right hon. Friend accept that I am reassured by the fact that he admits that compensation is needed? However, in addition to the sheep farmers, haulage contractors and auction markets have suffered a fairly dramatic drop in their income. Will their position also be considered? Will he confirm to the House, as I had hoped my right hon. Friend the Minister for Health would confirm, that there is no danger whatsoever to any man, woman or child in this country in eating sheepmeat?

Mr. Jopling: I can gladly confirm that there is no danger. With regard to the matter of abattoirs and markets, the undertaking that I gave to consider compensation was for specific farmers. One has to realise that abattoirs and markets were able, if they wished, to draw sheep from outside the areas in which the restrictions applied. With regard to compensation, I can only repeat what I said. We are prepared to discuss cases of compensation for severe loss in particular circumstances by specific farmers.

Mr. Mark Hughes: I am deeply disturbed by the right hon. Gentleman's comment that abattoirs can draw from elsewhere. The butchers and abattoirs in parts of north Wales cannot, without great loss, call from sources

elsewhere. They are as eligible to compensation as anyone else. Will they be considered, and will the right hon. Gentleman please ask that his right hon. and hon. Friends from the Welsh Office are present on such occasions?

Mr. Jopling: With regard to markets and abattoirs, I can only repeat the truth. Markets and abattoirs, even if they were within the restricted areas, were and are entitled to draw their livestock and sheepmeat from outside the area.

Mr. Home Robertson: We welcome the fact that the Minister has felt able to lift the ban in certain areas. The Minister of State, Foreign and Commonwealth Office told me in a written reply on 1 July that the Government were reserving the right to press a claim against the Soviet Union for any losses, but does the Minister accept that farmers whose lambs have missed the market cannot possibly wait to press a claim through the International Court of Justice? The right hon. Gentleman gave a clear commitment on 20 June to the principle of paying compensation to people who had sustained losses, and he repeated that commitment today, but he appeard to be back-pedalling in a speech that he made to farmers at the Great Yorkshire show. Will the Government try to wriggle out of that commitment, or will they pay compensation where it is justified?

Mr. Jopling: The hon. Gentleman is putting words into my mouth. What I have done today is to repeat precisely the undertaking that I gave to the House on 20 June. Perhaps some newspapers misreported what I said at the Great Yorkshire show the day before yesterday. If the hon. Gentleman reads the Yorkshire Post, I think he will find that, in its customary way, it has got it right.

Food Labelling

Mr. Meadowcroft: asked the Minister of Agriculture, Fisheries and Food what recent representations he has had on food labelling.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): We have recently received comments on our proposal for fat content labelling of foods and on guidelines for nutrition labelling, and on European Community proposals for amendment of the EC food labelling directive 79/112.

Mr. Meadowcroft: Does the Minister recognise that many hon. Members are getting weary of the complacent attitude towards food labelling and of the Government not going anywhere near far enough? When will the Food Advisory Committee's report on colouring be published, which has been suppressed? Will the Minister go further and issue instructions that labelling must include a warning that the azodyes, the benzoates, the sulphites, the sulphates, the nitrites, the nitrates, and the BHA and BHT additives, all of which are already banned from baby food, are possibly toxic to people in vulnerable groups?

Mrs. Fenner: The reasons why those additives are not in baby food is that there are two criteria for food additives —safety and need. If there is not an established need in baby foods, the additive is not put in, so that every additive that is passed as safe in adult food is safe if babies or children should eat it. Otherwise, it would not be in the food. I a sorry that the hon. Gentleman should think me complacent. We have a strict consultation pattern, which


is required in the legislation. We issued our proposals on 13 February. We asked that observations should be received by May. We sent out to 700 interested parties, and we are now assessing their comments.

Mr. Coombs: As the Committee on Medical Aspects of Food Policy report recommended an increase in the intake of complex carbohydrates and warned against an increase in the intake of simple sugars to make up for the deficiency in calories consumed from eating less fat, how does my hon. Friend expect the consumer to make the right choices in the absence of the mandatory labelling of sugars?

Mrs. Fenner: COMA did not request or recommend statutory labelling for other than fats and saturated fatty acids. As my hon. Friend says, it suggested some reduction in other things. I should inform him that sugars are already required to be shown in the listing of ingredients, which came fully into effect on 1 July this year. I should further tell him that COMA advised at the 20 June meeting last month that a panel be set up to examine the effect of sugars in the diet. We shall, of course, consider the implications of any such report.

Mr. Pike: While it is to be welcomed that on this occasion the Government are at least consulting, which is very unusual for this Government, when will they cut the waffle and take action on labelling, and ensure that accurate labelling is provided, which is what the public seek?

Mrs. Fenner: The hon. Gentleman speaks in contradictions. The Government do consult, as required under the legislation. His Government consulted on agricultural matters as they were required to do under the legislation. He cannot expect consultation and, at the same time, expect us to carry out labelling without taking due account of the consultation requested.

Mr. Michael McNair-Wilson: Is my hon. Friend satisfied with the labelling of so-called health foods? Does she think that the description on labels is substantiated by scientific research? Does she not think that the time has come for approved definitions in which the Government would have some say?

Mrs. Fenner: Labelling requirements must be complied with. For example, those foods which purport to aid slimming must be labelled extremely carefully. If my hon. Friend has any instances that he wishes to draw to my attention, I shall happily look at them.

Mr. Donald Stewart: Can the Minister assure the House, since the fast food merchants have taken considerable umbrage at the slight advances that have been made, that she will give priority to the consumer interests, and that all foods, with relevant cartons, will contain a complete and accurate note of the contents?

Mrs. Fenner: The regulations were introduced in 1984. They came into operation fully on 1 July. They require total ingredients listing in order of the amount in the processed food. Every additive must be put on the label in its generic form and with its E number.

Cereals (Co-responsibility Levy)

Mr. Terry Lewis: asked the Minister of Agriculture, Fisheries and Food what is his latest estimate of the proportion of cereals grown in the United Kingdom which will be liable for the co-responsibility levy.

Mr. Jopling: I estimate that about three quarters of the United Kingdom's cereals production is likely to be subject to the levy.

Mr. Lewis: Is the Minister not aware that this is the first time that he has given any indication of the way in which the scheme will work? It should have been in operation at least 10 days ago. The whole industry has been thrown into confusion by this vacillation, and the Minister should be ashamed of himself.

Mr. Jopling: We have continually made the industry as a whole aware of how the arrangements will work. We have had a good deal of difficulty, because we did not have the final version of the Community's rules in English until recently. It is wrong to suggest that the industry has been kept in the dark.

Sir Peter Mills: I congratulate my right hon. Friend on the fact that the present proposals are a jolly sight better than the original ones. Having said that, many problems remain. Will my right hon. Friend bear in mind that, especially in the south-west of England, feeders must pay at least another £2 a tonne as a result of the burden? The burden of the co-responsibility levy should be shared all over British farming.

Mr. Jopling: I am grateful to my hon. Friend for his opening remarks. He is right in saying that we succeeded very well in the price fixing in reducing dramatically the discrimination that existed in the Commission's original proposals. I accept from my hon. Friend that many difficulties are inherent in the co-responsibility levy. That is why the House agreed that we should do everything we could to resist it. However, we found ourselves completely isolated and, at the end of the day, we had to accept it. I realise that it is likely that extra costs will fall upon the industry as a result of having to pay the levy.

Mr. J. Enoch Powell: What opportunity and what powers will the Minister have to resolve the problems that have arisen over the interpretation of first-stage processing in the Commission's regulations in this context?

Mr. Jopling: So far there is no Community or national definition to work on as regards what is a holding. I think that that is what the right hon. Gentleman is referring to. We are still considering the detailed criteria necessary in the light of comments made to us by the trade organisations concerned. We shall be issuing guidelines to the industry as soon as possible. Ultimately, the intervention board must decide in individual cases.

Mr. Heathcoat-Amory: Is my right hon. Friend aware that apparently the wretched tax is to be paid by compound feed mills but not by integrated units on farms, however large they may be? Does my right hon. Friend agree that that is highly discriminatory? Will he, at the very least, tighten up the rules to achieve a measure of equality and to exempte only those genuine individual farmers compounding their own feed and giving it to their own animals?

Mr. Jopling: Yes, but my hon.Friend should recall that, under the rules, a producer would be exempt from the levy if he processed grain on his own agricultural holding for use in animal feed on that holding. Exemption of an intensive unit would depend on whether an individual business met the criterion that compounding and livestock production were carried out on the same holding. We shall issue guidelines on that as soon as possible.

Mr. John: The right hon. Gentleman knows that this tax came into force and should have been levied 10 days ago. He said that the criteria are ultimately the responsibility of the intervention board. How much later is "ultimately"? I understand that at a meeting yesterday the trade was given no greater clarity about the criteria. Who is to blame for this mix up?

Mr. Jopling: The delay occurred because the Commission did not supply us with the detailed rules until a good deal of time had passed. I am sure that the hon. Gentleman is aware, because he has read the regulations which have come from Brussels, that the levy will be paid on the new crop. The new crop has not yet begun to come forward for processing, or for exporting or to go into intervention.

Coal Mining Subsidence

Mr. Heddle: asked the Minister of Agriculture, Fisheries and Food what discussions he has recently had with the National Farmers Union on the subject of coal mining subsidence.

Mrs. Fenner: None, but the National Farmers Union copied to me its representations to my right hon. Friends the Secretaries of State for Energy and for the Environment on the report of the Waddilove committee.

Mr. Heddle: Does my hon. Friend agree that many small farmers and smallholders, especially in mining counties such as Staffordshire, are suffering severe hardship because they cannot obtain compensation for consequential loss against coal mining subsidence? Will my hon. Friend use her persuasive efforts to urge our right hon. Friend the Secretary of State for Energy to implement some of the Waddilove proposals as soon as possible.

Mrs. Fenner: We are concerned that farmers whose land suffers subsidence should receive appropriate compensation where restoration of the land is not practical. As my hon. Friend knows, such compensation is the responsibility of my right hon. Friend the Secretary of State for Energy.

Home-produced Food

Mr. Knox: asked the Minister of Agriculture, Fisheries and Food what proportion of food consumed in the United Kingdom is home-produced.

Mrs. Fenner: It is provisionally estimated that 60 per cent. of all food consumed in the United Kingdom was home produced in 1985.

Mr. Knox: What was the percentage before Britain joined the European Community? Does my hon. Friend agree that, if the level is to be maintained and improved, the Government must continue to give strong support to British agriculture, especially the livestock sector?

Mrs. Fenner: That percentage compares with 50 per cent. in 1973 and represents a considerable achievement by the industry. However, self-sufficiency in indigenous foods — those that can be grown commercially in Britain's climate—increased from 62 per cent. in 1973 to 80 per cent. in 1985. I think that that will reassure my hon. Friend that we are giving that support to the farming community.

Mr. Canavan: Is it not time that the Government took effective action against the high proportion of South African foodstuffs in our shops? Does the Minister not

realise that sanctions of this nature would help home food producers as well as help to bring about the end to the evil apartheid regime in South Africa?

Mrs. Fenner: The hon. Gentleman's ideology should not persuade him that we could grow citrus fruit in this country.

Mr. Andy Stewart: My hon. Friend's comments are good news for the British producer. However, does she agree that much of this has been achieved by the promotional work carried out by the Women's Farming Union? Will she consider appointing a member of the Women's Farming Union to head Food from Britain, as Sir Richard Butler does not appear to be acceptable?

Mrs. Fenner: I note what my hon. Friend says, and I am trying very hard not to let my Freudian slip show. Of course I agree that the Women's Farming Union, the agriculture industry, the food industry and Food from Britain have all made a great contribution. It is also significant that, as well as home consumption, our food exports are now some £2·7 billion a year compared with £800 million in 1975.

Mr. Livsey: Will the Minister comment on the position in the dairy industry, which is only 85 per cent. self-sufficient, and which is having to accept a further 3 per cent. cut in milk quotas, with subsequent unemployment among dairy creamery workers? Will she please make a statement about New Zealand imports and say whether these can be offset against quota?

Mrs. Fenner: In relation to the hon. Gentleman's latter point, the Community has a commitment, which we fully support, not to deprive New Zealand of outlets essential to that country. It is significant that New Zealand exports of butter to the Community have less than halved since our accession to the Community.

Mr. Key: Does my hon. Friend agree that only rarely do urban consumers see the connection between what is happening in the fields in the countryside and what appears on their supermarket shelves? Would she therefore join me in congratulating Safeways and other supermarkets on displaying home-produced rape oil on their shelves?

Mrs. Fenner: Yes indeed. Of course, Food from Britain has, through its quality charter systems, also drawn the consumer's attention to the quality of British food.

Dr. Godman: Does the Minister agree that the British fisherman plays an important part in producing food for the domestic consumer? Will the hon. Lady and her ministerial colleagues give an assurance that the provision for the Sea Fish Industry Authority will be maintained so that a first-class product can continue?

Mrs. Fenner: I wholly agree with the hon. Gentleman about the great and increasing contribution that fish makes in persuading people of the high quality of British food. We support the Sea Fish Industry Authority in its promotion of fish. I am delighted to see that supermarkets also promote fish heavily.

Mr. Phillip Oppenheim: Despite the fact that the agriculture industry has had great success in gaining a larger share of the home food market, will my hon. Friend accept that none the less, it is true that, since the


introduction of milk quotas, that share has slipped back a little, to the benefit of French and Dutch dairy farmers, who produce a surplus, while British dairy farmers have had to cut back despite the fact that we are not self-sufficient overall in dairy products?

Mrs. Fenner: Domestic butter production, as a proportion of total new supplies, has increased from 57 per cent. in 1980 to 64 per cent. in 1985. For cheese, there has been a slight decrease from 70 per cent. to 67 per cent., but that figure reflects cheese imports and an increased range of choice.

Lamb (Radiation)

Mr. Hirst: asked the Minister of Agriculture, Fisheries and Food what checks his Department is currently undertaking into radiation levels in lambmeat; and if he will make a statement.

Mr. Jopling: I refer my hon. Friend to the reply I gave earlier to the hon. Members for Ross, Cromarty and Skye (Mr. Kennedy) and for Ogmore (Mr. Powell). I intend to reduce further the size of the designated area in Cumbria as soon as additional sampling results confirm the continued fall in radiocaesium levels.

Mr. Hirst: Does my right hon. Friend agree that the radiation testing and the open approach of his Department are most welcome? Does he regard it as unfortunate that certain sections of the media have indulged in unnecessary scaremongering about lambmeat, to the detriment of farmers and butchers? Is it not true that I received a larger dose of radiation when I had an X-ray on a tooth recently than I would have received if I had eaten lambmeat for each and every meal—at breakfast, lunch and dinner—for a month?

Mr. Jopling: My hon. Friend has done us all a service in pointing out just how prudent are the safety levels to which we have been working. His conclusions are fully borne out by the fact that this year the price of lamb on the market is higher than in the corresponding week last year. That shows that the housewife also has confidence in the prudent safety levels that the Government have adopted.

Mr. Torney: Will the Minister instruct Ministry scientists to research into whether the future offspring of lambs born during the Chernobyl disaster could be infected with caesium? The House should remember that caesium has a 14 year half-life.

Mr. Jopling: Scientists in my Department are already carrying out extremely extensive testing, and they will certainly consider that point.

Mr. Bill Walker: Does my right hon. Friend agree that an essential factor in obtaining a reasonable price for one's products is confidence? When confidence has been shattered as a result of radiation checks, farmers are concerned that sheep, and sheepmeat from allegedly nuclear-free zones, could affect other areas that are not nuclear-free, where the price of sheepmeat has already been adversely affected.

Mr. Jopling: The nonsense surrounding nuclear-free zones has nothing to do with the fact that the British housewife fully understands that sheepmeat is safe to eat, and is very good value.

Mr. Campbell-Savours: Is the Minister aware of the interesting work done by the Institute of Terrestrial Ecology? It is now preparing a national survey of all vegetation and grassland in order to establish radiation levels, with particular reference to Cumbria and the Lake District, which have lately been the subject of some fairly vigorous criticism, which has in turn damaged the tourist trade and the farming industry. Without pre-empting the institute's findings, does the Minister agree that they will probably help to secure a better image for the county?

Mr. Jopling: I join the hon. Gentleman in paying tribute to the fine work done by the Institute of Terrestrial Ecology at Grange, in my constituency. It has been very helpful to us in the past few weeks in allowing us to isolate the areas where restrictions should apply. It has a very important future workload, and I hope that the results of those tests will help us, and will facilitate dealing with some of the rather silly criticisms about the safety of the Cumbria area.

Mr. D. E. Thomas: Even if the Minister was misquoted in the press on the issue of compensation for sheepmeat producers, he could not have been misquoted yesterday morning on Radio Wales, because I heard him myself. Will he now state clearly the Government's policy on compensation? Will he also state clearly that, whatever the detail, the Government intend to pay the costs sustained by sheep producers in my constituency and others as a result of radiation levels?

Mr. Jopling: I do not know whether the hon. Gentleman was in the Chamber earlier—

Mr. Thomas: I was.

Mr. Jopling: Earlier, I said that the leaders of the NFU recognised that until more data are available it is impossible to look at the question of compensation in detail. But I am glad to repeat what I said on 20 June, as it still stands. We are
prepared to discuss cases of compensation for severe loss in particular circumstances to specific farmers." — [Official Report, 20 June 1986; Vol. 99. c. 1321.]

Mr. Home Robertson: Will the Minister think again about his refusal to review the contingency plans for radiation emergencies in the light of the Chernobyl disaster? Does he not accept that there is evidence that the Ministry was caught napping during the first week in May, and that there were serious shortcomings in the advice made available to both producers and consumers?

Mr. Jopling: I strongly resist the suggestion that my Department was caught napping. Nothing of the sort occurred. The monitoring being carried out by my Department has been unsurpassed by any comparable department in the European Community.

Cereals (Co-responsibility Levy)

Mr. Fatchett: asked the Minister of Agriculture, Fisheries and Food whether the cereals co-responsibility levy will apply to large-scale livestock producers who process their own feed.

Mr. Jopling: Any producer, whatever his size, who processes cereals on his agricultural holding for use in animal feed on that holding is exempt from paying cereals co-responsibility levy on that grain.

Mr. Fatchett: Does it not appear from the right hon. Gentleman's earlier answers that small and medium-sized producers, which are much more likely to have to buy feed rather than rely upon their own, will have to pay the levy? As a result, in an industry which is very competitive and in which margins are tight, is is not likely that some producers will go out of business?

Mr. Jopling: I cannot accept that final comment. The hon. Gentleman should understand that many medium-sized and smaller farms mix a good deal of their feeding-stuffs at home and therefore would not pay the levy. However, grain that goes for processing, including the manufacture of animal feeds, will be subject to the levy.

Mr. Colin Shepherd: Does my right hon. Friend accept that there is considerable urgency about resolving the problem to which he referred earlier? There is much uncertainty in the intensive livestock industry as to who will pay the levy and costs are, therefore, affected in one way or the other. There is also uncertainty about the future purchasing arrangements for feed. Does he expect to have the problem resolved within days, or weeks?

Mr. Jopling: There is no uncertainty about who is exempt from the levy. A producer who produces grain on his own agricultural holding for use in animal feed on that holding is not liable to pay the levy. I am perfectly well aware that there have been delays in finalising the Community regulations and that that has disrupted trade. I regret this. I and my officials have kept in close and continuous contact with interested trade organisations. We have always sought to clear up the uncertainties as quickly as possible, and we shall continue to do that.

Mr. John: How can the right hon. Gentleman say that when his Department has not defined an agricultural holding for the purpose of the levy? This is important, because if integrated producers are exempted from the co-responsibility levy, it means that one third of the feed grain produced in Britain will be exempt and the statement of my hon. Friend the Member for Leeds, Central (Mr. Fatchett) that small and medium-sized producers will be penalised unfairly is justified.

Mr. Jopling: I hope that the hon. Gentleman understands what he is saying. He must understand that the more farms there are that are manufacturing feed and which we ask to pay the levy, even though they may be large integrated holdings, the more money may unnecessarily go to the Community's funds from Britain. We must weigh one thing against the other.

Mr. John Townend: Does my right hon. Friend accept that the application of the levy will cause great unfairness, specially to producers such as Twydale Turkeys in my constituency, which purchases 45,000 tonnes of feed from four mills and will be put at a competitive disadvantage? It could also result in those mills having to reduce employment. What action can he take to make the application of the levy fairer among various sectors of the industry?

Mr. Jopling: My hon. Friend will recall that when we debated the matter before the price-fixing resolution we agreed that inherent in the levy system was some discrimination and unfairness, and so it has proved. That is why we did everything we could to avoid a co-responsibility levy in those price-fixing negotiations.

Finished Lambs (Sales)

Mr. Livsey: asked the Minister of Agriculture, Fisheries and Food what are the provisional figures for sales of finished lambs in markets in England and Wales, for the weeks ending Saturday 28 June and Saturday 5 July, compared with the same weeks in 1985.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John Selwyn Gummer): Figures from the Meat and Livestock Commission, based on 64 sample markets in England and Wales, show that 87,517 lambs were certified in the week ending 29 June 1985 and 77,692 in the week ending 6 July. This year's corresponding figures are 61,426 and 63,505.

Mr. Livsey: I am grateful for that information. In view of these figures, may I inquire whether, in respect of consequential losses outside the areas affected by the Chernobyl fall-out, the Minister will consider compensation for those lambs that did not qualify for the variable premium?

Mr. Gummer: The hon. Gentleman will know that the change in the distribution of sales of lambs is largely due to the lateness of the season, and it is too early to make any kind of judgment. On the matter of compensation, my right hon. Friend has made his position clear.

Common Agriculture Policy (Expenditure)

Mr. Deakins: asked the Minister of Agriculture, Fisheries and Food what is the latest estimate of common agricultural policy expenditure in 1986; how this compares with the budgeted amount; and if he will make a statement.

Mr. Jopling: The Commission's preliminary draft supplementary and amending budget for 1986 provides 23,025 mecu for expenditure under the common agricultural policy. This compares with 22,009 mecu in the present budget as adopted by the European Parliament.

Mr. Deakins: Has the Secretary of State read the recent speech of the Minister for Overseas Development calling for a radical reform of food aid policy in the Common Market? If so, does he agree with the principles involved and will he seek to extend them to the disposal of commercial surpluses, which are a major part of the costs of the CAP which he has just mentioned?

Mr. Jopling: As usual, my right hon. Friend made a fine speech and the implications of what he said will be taken into account in dealing with the disposal of surplus products from the Community. However, I am sure the hon. Gentleman recognises that at this time the Community is extremely short of cash.

Oral Answers to Questions — PRIME MINISTER

Engagements

Sir John Biggs-Davison: asked the Prime Minister if she will list her official engagements for Thursday 10 July.

The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in this House I shall he having further meetings later today.

Sir John Biggs-Davison: Will my right hon. Friend give an assurance that Her Majesty's Government will not countenance force against South Africa, recalling the Leader of the Opposition's advocacy of mandatory United Nations sanctions, the logic of which, according to the right hon. Member for Leeds, East (Mr. Healey), is that we must be prepared for a naval action against South Africa — and that was the ex-Minister who wanted to arm the South African navy?

The Prime Minister: I am glad to respond to my hon. Friend. The Government are not talking about the use of force in connection with apartheid in South Africa. Rather are we calling for the suspension of violence on all sides and seeking a peaceful solution. I hope that everyone on both sides of the House will wish my right hon. and learned Friend the Foreign Secretary well in his great endeavours.

Mr. Hanley: asked the Prime Minister if she will list her official engagements for Thursday 10 July.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Hanky: The House is rightly concerned with the issue of sanctions, and, indeed, with the effect that that debate is having around the world, but perhaps the House is losing sight of the positive steps that the Government are taking to help the blacks in South Africa and in the frontline states. Will my right hon. Friend take this opportunity to remind us of what the Government are doing to help those whom all hon. Members wish to help?

The Prime Minister: As my hon. Friend is aware, at the recent European Community Heads of Government meeting we agreed to take positive measures to help the blacks in South Africa and we have allocated a further £15 million over the next five years for that purpose in addition to the £22 million that we are already spending. Last year we gave £70 million in aid to Zimbabwe, Zambia, Mozambique, Botswana, Lesotho and Swaziland.

Mr. Kinnock: Has the Prime Minister seen the report from the Select Committee on Social Services, which has a seven to three Conservative majority, which says:
Taking into account efficiency savings, on the most favourable interpretation of the Government's own data for the last five years, the Government has done no more than half what, by its own admission, should have been done … total underfunding of the hospital and community health services was £1,325 billion".
When will the Prime Minister provide enough resources to come up to even the minimum standards set by her Government?

The Prime Minister: I have not seen the detail of that report, as it came out only this morning. I am aware of some of the figures. May I point out that spending on the National Health Service has increased from £7·5 billion in 1978–79 to £18·75 billion in 1986–87. That means that the average expenditure per family to finance the Health Service out of taxation has gone up from less than £11 per family per week to £27 per family per week. That is what families have to find in tax to finance the Health Service, which is the best Health Service that we have ever had.

Mr. Kinnock: Has it occurred to the Prime Minister that families not only pay taxes but need dependable health services, and that they have a real grievance now over the deficiencies in that Service? Does she not accept that, on

her Ministers' own admissions, the figure that she used earlier should be at least a third higher in order to meet the realities of increasing numbers of frail elderly people, of changes in medical technology and of changes in provision of community services? The Prime Minister has asked that the facts should talk. Do not these facts of underfunding talk very clearly and say that the Health Service is not and never will be safe in the Prime Minister's hands?

The Prime Minister: No. We have the best Health Service ever. It is safe in our hands, and it far exceeds what the last Labour Government did. I note that the Merrison committee set up by the Labour Government said:
We had no difficulty in believing the proposition put to us by one medical witness, that we can easily spend the whole of the gross national product on the health service.
Every Government have to work within constraints, but what the right hon. Gentleman said about an extra third would mean that every family would immediately have to increase its spending from £27 per week on the National Health Service to £36 per week.

Mr. Hicks: Will my right hon. Friend examine the Commission's proposals for New Zealand butter imports for the next two years, which, if implemented, could have adverse effects not only for our dairy farmers but for our taxpayers? Will she recall that these arrangements were meant to be transitional, yet New Zealand today has a greater share of our butter market than it did in 1973 at an annual cost in excess of £100 million?

The Prime Minister: As my hon. Friend — and, I believe, the House—is aware, we have always fought for New Zealand in the Community, knowing full well the importance of both lamb and butter to that economy. The amount that the Commission is proposing should be permitted to be imported for the next two years is, of course, considerably less—indeed, almost half—what it was when we went in at the beginning, and the figures being proposed represent a reduction on current levels, but are in line with what was proposed when the question was last discussed in 1984. I believe that we should continue to fight for New Zealand in the Community, but I believe that the figures should be realistic and that those have been proposed by the Commission are realistic.

Mr. Steel: If I may revert to South Africa and look back at the whirlwind of interviews that the Prime Minister has given over the last 48 hours, of which result is she most proud? Is it the paean of praise showered on her by Pretoria state radio, the humiliation of the Foreign and Commonwealth Secretary in Zambia and Zimbabwe, or the damage to the Commonwealth games in Edinburgh?

The Prime Minister: Perhaps the right hon. Gentleman does not know it, but I think that the argument against general economic sanctions and punitive economic sanctions has been won. I notice that The Guardian says today:
Economic sanctions will not bring South Africa to its knees: they will mean that black children starve: the desolation of the Pretoria economy would he a tragedy for all Africa.
That is true. Is that what the right hon. Gentleman wants?

Mr. Norris: Would my right hon. Friend care to comment on her view this morning of the new Rover 800 series car, and will she join me in congratulating my constituents at Cowley on a magnificent product and wish it well for the future?

The Prime Minister: I saw the car and it is excellent and of superb design. I hope that it will sell well, and I can certainly recommend the blue one that I drove this morning.

Mr. Yeo: asked the Prime Minister if she will list her official engagements for Thursday 10 July.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Yeo: In applauding my right hon. Friend's determination to reduce the burden of tax on the lower paid, may I urge her to consider further increases in tax thresholds, further reductions in employee national insurance contributions for low-paid workers and the reintroduction of a lower rate of taxation, in preference to cutting the basic rate of income tax, as all those three measures are far more cost-effective ways of using available resources?

The Prime Minister: As my hon. Friend is aware, our objective remains to reduce the burden of income tax, particularly on those on average earnings or lower pay. Some 18 million taxpayers are on below-average male earnings, but they pay 42 per cent. of the yield of income tax. We must have special regard to the amount that they pay. It remains our aim to reduce it. My hon. Friend has a particular scheme, which I shall draw to the attention of my right hon. Friend the Chancellor of the Exchequer.

Mrs. Renée Short: I am sure that the Prime Minister is delighted with the vindication of Mrs. Wendy Savage by the committee set up to investigate her clinical competence. Will the Prime Minister now ensure that those consultants who accused Mrs. Savage, and who deprived her patients of her skill and care for all these months, are investigated by the committee of the teaching district?

The Prime Minister: I shall draw what the hon. Lady has said to the attention of my right hon. Friend the Secretary of State for Social Services.

Mr. Lyell: Will my right hon. Friend warn the public, and particularly employees and trades unionists, against the reported Labour party proposal to remove from the courts and hand over to some trades union-based quango the power, such as it might be, to enforce their rights to secret ballots before strikes, and to elect union officials? How can this be described as either freedom or fairness?

The Prime Minister: I gladly agree with my hon. and learned Friend. It has been our purpose to give ordinary members of trades unions legally enforceable rights to have a proper ballot and we shall continue to pursue that objective.

Mr. Kirkwood: asked the Prime Minister if she will list her official engagements for Thursday 10 July.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Kirkwood: Is the Prime Minister aware that the proposed social security regulations designed to restrict single payments available to claimants on supplementary benefit were expected to be laid on the Table of the House this week, but have now been deliberately suppressed by the DHSS until after the Newcastle-under-Lyme by-election? Was she consulted about the decision on timing,

and will she give the House a guarantee that the regulations will be debated before the recess and not implemented by stealth during the recess?

The Prime Minister: It is my understanding that the regulations will be debated before the recess.

Mr. Winnick: asked the Prime Minister if she will list her official engagements for Thursday 10 July.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Winnick: Is the Prime Minister aware that those of us who are very much opposed to her policy on South Africa hope, nevertheless, that the Commonwealth leaders, when they meet, will bear in mind that the Prime Minister does not represent the majority of British opinion, and moreover that the days of her wretched Administration are coming to an end?

The Prime Minister: I am afraid that the hon. Gentleman is guilty of wishful thinking on the latter point. I believe that the overwhelming majority of the British people reject the use of force to try to solve the South African problem, wish to have a suspension of violence and a peaceful solution, and support my right hon. and learned Friend the Foreign Secretary in his mission.

Mrs. McCurley: Now that the European Court has delivered its judgment on compensation for nationalisation, will my right hon. Friend suggest how Parliament can protect the property rights of the citizens of this country, particularly if, God help us, there are predations from the Labour side of the House, if the Opposition are ever returned to government?

The Prime Minister: The people can protect the property rights of citizens by never returning a Labour Government.

Mr. Ray Powell: asked the Prime Minister if she will list her official engagements for Thursday 10 July.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Powell: The Prime Minister can get into a fit about sanctions against South Africa, but has she considered that the bloodstained coal of South Africa has caused the redundancy of many people in this country, particularly in my constituency, where her Government have closed five collieries and put 5,000 miners out of work? Is she aware that since the miners' strike hundreds of miners have been pushed out of work because coal is being imported from South Africa? What are the Prime Minister and her Government going to do to stop that?

The Prime Minister: Judging from the drift of the hon. Gentleman's question, he is against causing further unemploymeent by imposing sanctions on South Africa. To impose sanctions on South Africa would cause further unemployment there and would cause further unemployment here. I understand that the hon. Gentleman does not wish that to happen. Nor do I.

Mr. Colin Shepherd: asked the Prime Minister of she will list her official engagements for Thursday 10 July.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Shepherd: Is my right hon. Friend aware that the whole nation will be watching carefully the progress that


she makes with her new Rover Sterling car? As for the future of this car, does my right hon. Friend agree that it will outsell Mercedes and Audi only if its quality and reliability are of the absolute topmost maximum possible effectiveness?

The Prime Minister: I believe that that car is of the topmost design, that it has a super engine and that every attention has been given to every detail. Special extra provision will also be made for its export to the United States. We wish it well. I have great faith in the car.

Business of the House

Mr. Neil Kinnock: May I ask the Leader of the House whether he will state the business for next week?

The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): Yes, Sir. The business for next week will be as follows:
MONDAY 14 JULY Until seven o'clock, private Members' motions.
Remaining stages of the Legal Aid (Scotland) Bill.
The Chairman of Ways and Means has named opposed private business for consideration at seven o'clock.
TUESDAY 15 JULY Opposition Day (18th Allotted Day, 1st Part). There will be a debate entitled "Defending British High Technology Industries". The debate will arise on a motion in the names of the leaders of the Liberal and Social Democratic parties.
Motions on orders and regulations relating to drivers' hours. Details will be given in the Official Report.
The Chairman of Ways and Means has named opposed private business for consideration at seven o'clock.
WEDNESDAY 16 JULY Opposition Day (19th Allotted Day). There will be a debate on an Opposition motion, the subject for debate to be announced.
Motion on the Control of Pesticides Regulations.
Motion on secretarial allowances.
Remaining stages of the British Council and Commonwealth Institute Superannuation Bill.
THURSDAY 17 JULY Completion of remaining stages of the Finance Bill.
Motion relating to the Channel Tunnel Bill.
At ten o'clock the question will be put on all outstanding Estimates.
FRIDAY 18 JULY Consideration of any Lords amendments which may be received to the Dockyard Services Bill.
Proceedings on the Insolvency Bill [Lords] and the Company Directors Disqualification Bill [Lords] which are both consolidation measures.
Motion on the New Towns (Extinguishment of Liabilities) Order.
MONDAY 21 JULY Opposition Day (15th Allotted Day, 2nd part). There will be a debate on an Opposition motion, the subject for debate to be announced.
Consideration of any Lords Amendments which may be received to the Gas Bill.
The House will wish to know that, subject to the progress of business, it will be proposed that the House should rise for the summer Adjournment on Friday 25 July.
[Regulations and Orders to be debated on Tuesday 15 July: Drivers' Hours (Harmonisation with Community Rules) Regulations; Drivers' Hours (Goods Vehicles) (Modifications) Order; Community Drivers' Hours and Recording Equipment (Exemptions and Supplementary Provisions) Regulations; Community Drivers' Hours and Recording Equipment Regulations.]

Mr. Kinnock: I am grateful to the Leader of the House. The mess in which the Government have placed themselves is obvious in next week's business. That is why we have a continual late, late show with so much important business being taken after 10 o'clock, and the Dockyard Services Bill and the new towns order coming

in on Friday. Does he really think that the Dockyard Services Bill, which vitally affects Plymouth and Rosyth, and the new towns order, which vitally affects many other places, is fitting business for Friday?
Is the right hon. Gentleman aware that major decisions are likely to be taken on the future of Leyland Bus and Truck in the next few days? Can he assure us that there will be a statement on the matter either tomorrow or on Monday? That is the time scale in which the Government should be operating. I ask the right hon. Gentleman to guarantee that there will be statements on the rate support grant for the different parts of Britain before the summer recess.
We are awaiting the Government's decision on how they will react to changes that have been made to the Social Security Bill in another place. A few hours for debate, especially if they are made available to the House on the day of the royal wedding, will not do justice to legislation affecting millions of elderly and poor people in Britain. Will the right hon. Gentleman reaffirm that, in response to my request, he will arrange for the Foreign Secretary to report to the House when he returns from his visit to southern Africa next week?
Finally will the right hon. Gentleman tell us when we are to hear the long-awaited statement on the Prime Minister's great anti-litter campaign? Will he take it from me that, on the basis of current calculations, the initiative seems as if it is to be as great a malfunction as Mr. Branson's earlier transatlantic odyssey.

Mr. Biffen: I shall take the Leader of the Opposition's questions in the sequence in which he presented them. It is a travesty to describe the business that I have announced as some sort of mess. He knows perfectly well that the House has to consider a good deal of business in the final two weeks before going into the summer recess. He knows that a well-judged programme of work has been presented for next week that will not detain the House unduly, unless there are those who are anxious to create mischief.
If the right hon. Gentleman wishes to make representations through the usual channels on the treatment of the Dockyard Services Bill, I shall take note of that. I hope, however, that he will recognise that, under successive Governments, Fridays have been properly treated as days for significant Government business as well as for other measures.
I shall refer to my right hon. Friend the Secretary of State for Trade and Industry the right hon. Gentleman's remarks about Leyland Bus and Truck and the possibility of a statement. I reassure the right hon. Gentleman by repeating what I told him last week. It is our plan to have the rate support grant announcement for the component parts of Great Britain laid before the House before it goes into recess.
We shall be making clear the Government's position and recommendations on the Lords amendments to the Social Security Bill. I must tell the right hon. Gentleman that for many people throughout the country, royal wedding or not, Wednesday 23 July will be an ordinary working day. I would not like to think that the right hon. Gentleman thought that for the House of Commons there was somehow to be a "second division" of work on that occasion. [Interruption.] I am sorry that those homespun observations have caused such anxiety and embarrassment on Opposition Benches.
Finally, I take account of what the right hon. Gentleman says about the desirability of the House learning from my right hon. and learned Friend the Foreign Secretary direct after he has concluded his present African journey, and I shall make that point known. Also, I hope that there will be a statement on United Kingdom 2000 next week.

Sir Ian Percival: May I draw my right hon. Friend's attention to the fact that early-day motion 991 on the death penalty for terrorists now has the support of 130 right hon. and hon. Members?
[That this House congratulates and thanks all those whose efforts played a part in securing the conviction of the Brighton bomber on charges of murdering five people and of those who so recently pleaded guilty in Belfast to murdering 17 people; extends its heartfelt sympathy to all who suffered loss or injury from their acts; asks itself whether there is available in such cases any penalty such as will in any sense meet the crime and whether in permitting the law as to penalties to remain as it is, it is doing sufficient to protect those who may be the next victims of such appalling evil; is of the opinion that it should give fresh consideration to extending the death penalty, now limited to treason and piracy, to criminal acts such as those done to terrorise; and asks the Leader of the House to arrange for it to have time to debate these matters.]
While I appreciate that my right hon. Friend cannot assist us before the recess, may I suggest that the horrific nature of the act referred to in the motion, and the fact that several people who have consistently voted against the death penalty support the motion show that this is not a closed subject? May I ask my right hon. Friend to give kindly consideration to allocating time to this subject, which is of great interest to the public, in the autumn programme?

Mr. Biffen: I take the point that my right hon. and learned Friend makes and I appreciate the terms in which he has put it to me. I shall consider it in the context of the overspill, but he will know that that is a fairly congested period of parliamentary existence. With the next session of Parliament, all sorts of additional opportunities may arise.

Mr. David Alton: Given the reply that the Prime Minister gave earlier this afternoon to my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) about laying the social security supplementary benefit regulations before the House, can the Leader of the House say when they will be laid? Will he also tell us the time scale for the review of secretarial allowances and whether that four-year review will look at fundamental questions as well as percentage increases?

Mr. Biffen: On the hon. Gentleman's first point, the order will be laid in good time and he need have no fear of being disappointed. On his second point, the four-yearly review is a fundamental review of the operation of the secretarial allowances and goes far beyond a consideration of mere percentages. No time limits have been suggested for reporting back, but I imagine that they will be reported back some time early next year.

Mr. Anthony Nelson: Will my right hon. Friend give consideration before the recess to finding time for a debate to draw attention to the significant increase

in overseas aid which the British Government are giving to many Commonwealth, including African, countries? It would provide a welcome opportunity for many of us to say to those Commonwealth countries which are now threatening to boycott and impose sanctions on the United Kingdom that they should not be allowed with impunity to bite the hand that feeds them.

Mr. Biffen: I fully understand my hon. Friend's anxiety that there should be parliamentary time for a debate on this topic; his point will receive widespread recognition. He will understand that I can offer no Government time between now and Parliament going into recess, but certainly the topic will still have considerable currency when we return in the autumn.

Mr. Merlyn Rees: Is the Leader of the House aware of the major problems that face us in some inner cities of the deteriorating housing stock, particularly of houses built in the 1950s and 1960s? Is he further aware that, in the city of Leeds, the problem has come to a head with the balconies of high-rise blocks being in danger of falling off, and that the people living in them are genuinely worried that little can be done because there is no money? Can we expect a statement on that next week? It is all very well going into recess and I am glad that we are, but meantime, unless the Department of the Environment comes up with some money, some people are in a far worse position than they would be in the old slum dwellings.

Mr. Biffen: I am grateful for the right hon. Gentleman's word of appreciation about the proposal that we should rise for the summer Adjournment on Friday 25 July. I was beginning to wonder whether I had a single friend on this topic in the House. I am perfectly prepared to revise the date, if the House would so wish. I will refer the point about housing in Leeds and more generally to my right hon. Friend the Secretary of State for the Environment.

Sir Anthony Grant: In addition to the statement by my right hon. and learned Friend the Foreign Secretary on his South African visit, will there be an opportunity, perhaps, to debate South Africa before we rise? If we did, it would provide an opportunity, first, for those who believe that economic sanctions are nonsense nevertheless to express the view that the National Government are being particularly pigheaded about the release of Nelson Mandela; and, secondly, for the Opposition to explain why, at a time when the pass laws were in full brutal effect, a Labour President of the Board of Trade was encouraging trade with South Africa and was saying in the House that if we stopped trading with countries with which we disagreed, we would soon be bankrupt. Perhaps the Opposition would wish to use a Supply day to refute the charge of humbug.

Mr. Biffen: I will try to give my hon. Friend as straight a reply as I can to a subtle question. I have to tell him that as things stand, if we are to go into recess on the date I have suggested, there will be no opportunity for a debate in Government time. Of course, there will be a recess Adjournment motion and the debates that arise from that. That may well give my hon. Friend the opportunity that he seeks.

Mr. Nicholas Brown: Will the Leader of the House ask his right hon. Friend the Secretary of State for Defence to make a statement next week answering points I raised in the Defence Estimates debate on Tuesday 1 July, on a Standing Order No. 10 application on Thursday 3 July and in questions to the Prime Minister on Tuesday 8 July about why the Harland and Wolff design drawings for the AOR1 were said to have been comprehensively costed in April and are still being reviewed at the Ministry of Defence now?

Mr. Biffen: As I have previously acknowledged, the hon. Gentleman is a persuasive advocate on that matter. I shall refer the points that he has raised to my right hon. Friend the Secretary of State for Defence.

Mr. Michael Latham: Has my right hon. Friend seen early-day motion 1094 in the name of my hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey) about cement imports from Greece, on which Conservative Members saw the Minister for Housing, Urban Affairs and Construction this morning?
[That this House is gravely concerned about the damage that will be caused to both the United Kingdom cement industry and to employment by state subsidised cement imports from Greece; and calls upon Her Majesty's Government to make urgent and strenuous representations to the EEC Commissioners to amend the transitional arrangements to prevent this dumping taking place.]
Is he aware that it is an extremely urgent and important matter on which we expect a statement from the Minister for Trade next week?

Mr. Biffen: I was aware of the motion to which my hon. Friend refers and of the exchanges that took place on the topic involving my right hon. Friend the Prime Minister. As my hon. Friend will appreciate, it is a matter in which we are beholden, to some extent, to European Community commitments and institutions. However, I shall certainly pass on to my right hon. Friend the Secretary of State for Trade and Industry the anxiety that there should be a statement.

Mr. Peter Hardy: Did the Leader of the House tell us that we were to deal with Lords amendments to the Gas Bill late at night a week on Monday? Is that not an example of gracelessness, since I understand that the House of Lords has not yet finished consideration of that Bill? Might it not be taken amiss by their Lordships and would it not be entirely reasonable if they did feel that anger?

Mr. Biffen: The advice, which I am sure was most thoughtfully considered, may be based on a misapprehension. I would judge that we are likely to get on to that business at about 7 o'clock in the evening.

Mr. Cecil Franks: I am sure that my right hon. Friend is well aware of the grave disquiet, not only in the House but throughout the country, concerning allegations against the deputy chief constable of Manchester and his subsequent removal from the inquiry into Northern Ireland. Will my right hon. Friend accept that hon. Members understand the difficulties of the Home Secretary, the Attorney-General and the Secretary of State for Northern Ireland in making any comment on the matter since they are the ultimate appellate authorities for matters within their responsibility? Will he convey to his right hon. Friend that, if the

Police Complaints Authority ultimately decides that there is no substance or validity to the allegations made against Mr. Stalker, it would be most convenient for those who have been culpable in making those allegations, if such an announcement of innocence were to be delayed until after 25 July when hon. Members will not have the opportunity to raise the matter in the House?

Mr. Biffen: My hon. Friend has put those points to me previously. I am sure that he will appreciate that I cannot, very helpfully, go beyond what I said last week. I shall certainly put the point that he has raised to my right hon. Friends for whom it is relevant.

Mr. Dave Nellist: Is the Leader of the House aware that if he is looking for someone to disagree with the 25 July recess date I will be the one? Apart from 4 million people on unintentional permanent holiday who are unemployed, most workers in this country get no more than four or five weeks holiday a year. If the arcane procedures of this place were brought into the latter half of the 20th century there would be a case for Members of Parliament having a similar length of holiday to workers in the rest of the country. [HON. MEMBERS: "It is not a holiday."] It is for Tory Members.
We should have that length of holiday if for no other reason than that, in this case, it would enable us to question the Prime Minister and the Foreign Secretary following the Commonwealth conference in August about why she is not prepared to implement economic sanctions against the apartheid regime in South Africa. We could then monitor the progress of those trade union organisations gearing themselves up in the next few weeks to implement such sanctions.

Mr. Biffen: The hon. Gentleman puts a lively point of view. I must most profoundly disagree with the proposition that the recess is analogous to a holiday. When I fought Coventry, East in the 1950s, that was a good apprenticeship. I lost nobly, I might say; Richard Crossman increased his majority. Let me tell the hon. Gentleman that I learnt many things. One was the hard work done by Maurice Edelman, Richard Crossman and Elaine Burton in that city during the recess. They would not have thought of that as a holiday. I hope that the hon. Gentleman will not cast aspersions to the effect that he is surrounded in the House by a mob that is about to decamp to the south of France.

Sir Eldon Griffiths: As we are moving into the marching season in Northern Ireland, when the House of Commons will not be in session, may I ask my right hon. Friend whether he has seen the call by one hon. Member of the House that the Royal Ulster Constabulary should do less than its duty in policing the march at Portadown next weekend, and the call of another hon. Member that a statutory body, the Police Federation for Northern Ireland, should actively fight against the Anglo-Irish agreement? Will my right hon. Friend make sure that, before the House rises, the Secretary of State has an opportunity to make it clear that it is a criminal offence for a Member of the House or any other citizen to seek to procure the disaffection of a police officer, that it is the duty of every police officer to uphold the law without malice or affection and with fear or favour to none, and that no hon. Member can get outside of those obligations?

Mr. Biffen: My hon. Friend raises a particularly effective point at this time in the affairs of the Province.


I believe that there is a widespread if not universal desire in the House to applaud the bravery of the Royal Ulster Constabulary in carrying out one of the most invidious tasks that could befall any civilian police force. I understand that initially the points that my hon. Friend raised are matters for consideration by the police, but I shall certainly draw the attention of my right hon. Friend the Secretary of State for Northern Ireland to them, so that he may consider them.

Mr. Andrew Faulds: When can the House have the chance to debate the competence of the British Rail midland region management, where services and maintenance have disastrously declined over the past few years and which, on the motto "We're getting there," managed to produce the timetable for the Birmingham-Paddington services, due on 12 May, on 10 July?

Mr. Biffen: Last week it was the hon. Gentleman's gastronomy that was adversely affected—

Mr. Faulds: Only briefly.

Mr. Biffen: It has to be briefly; I rather treasure these exchanges. This week it is the hon. Gentleman's travel arrangements. I suggest that it could very well be a matter for consideration in the recess Adjournment debate, but in any case I shall refer the hon. Gentleman's point to my right hon. Friend the Secretary of State for Transport.

Sir Geoffrey Johnson Smith: Can my right hon. Friend tell us whether it would be wise of us to expect a debate on the Peacock report before the recess?

Mr. Biffen: It would be foolish virginity of the most remarkable condition.

Mr. Robert Parry: ) I support the point raised by the hon. Member for Rutland and Melton (Mr. Latham) about the import of cement from Greece. I refer the Leader of the House to my early-day motion 1081.
[That this House, concerned at the increasing import of cement from Greece, the German Democratic Republic and Poland, which poses a threat to the United Kingdom cement industry and the stability of the home cement market, fears that over capacity, particularly in Greece, and further cheap imports will have a detrimental effect on jobs and investments; supports the Transport and General Workers' Union's special delegate conference on 21st July; and also calls upon Her Majesty's Government to take the necessary steps to protect the British cement industry and British working jobs.]
The right hon. Gentleman will be aware that there is a special delegate meeting of the Transport and General Workers Union, which is concerned about the effects that those imports may have on the cement industry in Britain and British worker's jobs.

Mr. Biffen: I understand that the concern is not confined to just one side of the House. It goes across a wide spectrum. I cannot add to the reply that I have already given, but I shall see that my right hon. Friend the Secretary of State for Trade and Industry knows of the interest.

Mr. Douglas Hogg: The Leader of the House will be aware of the prolonged opposition that my constituents and I have levelled against a proposal to put low-level nuclear waste at Fulbeck airfield. I think that he will be aware that Fulbeck airfield was run by the Ministry

of Defence, and that the original purpose for that has now ceased. Is the Leader of the House aware that many of my constituents believe that to use a former defence airfield for such a purpose is a breach of the principles enunciated by Sir Thomas Dugdale in the Crichel Down case at the time of his resignation? Will the Leader of the House take the opportunity to ensure that a senior Minister of the Crown tells the House whether the Crichel Down principle, as enunciated by Sir Thomas, still operates, or whether it has been abandoned?

Mr. Biffen: I shall pass on the request. I realise that my hon. Friend's constituency has a lively interest in the matter. I shall see what I can do to secure an answer for him.

Mr. Greville Janner: As the school holidays are approaching even faster than our own, and as schoolchildren will have even less to do than most hon. Members, will the right hon. Gentleman allow time for a debate on road safety in the absolute knowledge that a considerable number of children will be tragically killed on our roads during their holiday? Will he bear in mind tie carnage on the roads in constituencies, such as mine, that are being cut through the great estates, dividing the people who live on them, and causing a tremendous new danger to the children who play on them?

Mr. Biffen: The hon. and learned Gentleman will appreciate my difficulties about suggesting the availability of Government time. The hon. and learned Gentleman may have a chance to make the point on Monday of next week during transport questions.

Mr. Derek Spencer: My constituents who speculated in a vote for the alliance in the county council elections last year got their fingers badly burned when the rates were hoisted by 40 per cent. They are now horrified to learn that, apparently, the alliance stands for the dismantling of the multi-fibre arrangement, and that would cost thousands of jobs in my-constituency. Can we have an early debate, before the arrangement is renegotiated, so that those contemplating voting in the local government by-elections in my constituency in September know exactly what it will cost them to vote alliance this time?

Mr. Biffen: I shall gladly consider the question. A debate on the multi-fibre arrangement would demonstrate that not only was the alliance in favour of its dismantling, but that it carries its own seeds of discontent, because the hon. Member for Rochdale (Mr. Smith) strongly agrees with the alliance policy.

Mr. Geoffrey Lofthouse: I ask the Leader of the House whether he has had an opportunity to read early-day motion 1078.
[That this House calls upon Her Majesty's Government to provide time in Energy Efficiency Year for a debate in the House on energy efficiency; notes the Energy Committee's recommendation that such a debate would appropriately complement the extra-parliamentary activities being held during the year; and believes that the House is the appropriate forum for the Secretary of State for Energy to be held accountable for the level of success of the expensive 1986 campaign to promote energy efficiency by which he has set so much store.]
The early-day motion requests the Government to provide time for a debate on energy efficiency. Is the Leader of the


House aware that the Select Committee on Energy recommended that such a debate would be complementary to the extra-parliamentary activities taking place? Does he think that the Secretary of State for Energy should be accountable to the House for activities during Energy Efficiency Year?

Mr. Biffen: I understand the point that the hon. Gentleman has made, especially in the context of it being Energy Efficiency Year. There is no prospect of a debate in Government time before we go into recess. Obviously, it could be considered in the overspill.

Mr. Jonathan Aitken: Can my right hon. Friend tell us more about the latest spot of bother on the Channel tunnel, and why it necessitates a surprise late-night debate during the coming week? Will he ensure that the motion that we debate on that occasion will be broad, so that we can discuss the latest disclosures in today's press reports that the Eurotunnel consortium has had to call an emergency board meeting, following advice it received from its financial advisers in the City of London that it is unable to raise even the first £200 million of equity for this amazingly successful £4 billion project?

Mr. Biffen: I am in no position to comment on the financial problems that my hon. Friend believes might exist. However, the motion will be tabled later today. It will invite the House to instruct the Select Committee on the Channel Tunnel Bill to consider suggestions by petitioners for alternative means of access and egress to the Folkestone terminal.

Mr. Dennis Skinner: Will the Leader of the House revise his opinion about having a debate on South Africa, following his answer to the hon. Member for Cambridge, South-West (Sir A. Grant)? Such a debate could prove interesting. It would give us the opportunity to read out the names of all those 30-odd Tory Members of Parliament who are making money out of South Africa. It would enable the hon. Member for Stockton, South (Mr. Wrigglesworth) — a spokesman for the Social Democratic party—to explain that he is making money out of apartheid supported by Barclays bank. It would enable the Liberals and the Social Democrats to explain why they took £2,500 from General Accident, which is making money out of the alleyways in South Africa. Such a debate might lead those hon. Members, if they are concerned about the morality of apartheid, to say that they will give the money back. If the right hon. Gentleman has any problems in setting aside such a day, may I say that some of us are prepared to come here on the day of the wedding.

Mr. Biffen: Thank you very much. When the hon. Gentleman has stopped bending my ear, and as I have so little time available between now and the recess, may I discreetly and respectfully suggest that he bend the ears of his own Front Bench because there is a day and a half of Opposition time. I know the hon. Gentleman's difficulties—

Mr. Skinner: I am working on it.

Mr. Biffen: Good—keep working.

Mr. Peter Bruinvels: Following the suspicious circumstances surrounding the election of

Mr. John Macreadie as general secretary of the Civil and Public Services Association and the allegation of vote rigging and intimidation, will my right hon. Friend find time for a debate on employment and election for union office, as it is highly likely that a new election will be called by the Right wing, the moderates and the sensible members of the Civil Service? Is there not a need for a postal election, and therefore no intimidation, rather than a workplace election? Will my right hon. Friend provide time for such a debate?

Mr. Biffen: I think that my hon. Friend and the House generally will agree that the union is carrying out an inquiry. I should have thought that it would not necessarily be a bad thing to wait until the consequences are known.

Mr. D. E. Thomas: Will the right hon. Gentleman confirm that his right hon. Friend the Secretary of State for Wales is still a member of the Government? Having confirmed that, will the right hon. Gentleman have a word with his colleague, if he sees him in Cabinet, and ask him whether he will make a statement to the House on the fundamental issue of the effect of radiation on sheepmeat in my constituency and in other parts of north and mid-Wales, as he is the only Minister with responsibility for agriculture who has not made a statement to the House on that subject?

Mr. Biffen: I am a little concerned that the hon. Gentleman is perhaps so caught up in the glorious countryside of Meirionnydd that he has not come to the House to realise that my right hon. Friend the Secretary of State for Wales is a most effective Minister in Westminster and Whitehall and is fully in charge of affairs. I shall tell my right hon. Friend of the sad circumstances which seem to have overtaken the hon. Gentleman and ascertain whether there is any way in which he can remedy them.

Mr. Edward Leigh: I notice that we are to have a debate on secretarial allowances. Perhaps alliance Members of Parliament need particular help in this respect in light of the remarkable amnesia recorded on the part of 2·5 million people. An opinion poll published this week shows that, although 26 per cent. of the population voted for the alliance last time, only 18·5 per cent. remember doing so.

Mr. Biffen: I would say with all my heart that we have enough on the agenda next week without introducing that topic.

Dr. Norman A. Godman: As one who has an abiding interest in safety at sea and related matters, I deplore the fact that there is not to be a debate on next week's boat race. After all, there is the important issue of the safety of participants in that race. I should like to declare a personal interest. With no consultation whatsoever, I have been placed in the same boat as the hon. Member for Littleborough and Saddleworth (Mr. Dickens). With respect to the hon. Gentleman, I would suggest, on a fair amount of experience, that he constitutes a safety hazard on any vessel of less than 100 tonnes gross registered tonnage. I sincerely hope that an urgent constituency issue will take me away from the House next Wednesday.

Mr. Biffen: I understand the personal dilemma that confronts the hon. Gentleman. I can say only that he


should use the usual channels with he utmost expedition to secure a clear undertaking on pairing. As to the wider issue—

Mr. Frank Cook: This is the silly season.

Mr. Biffen: I have no responsibility for what happens next Wednesday. The point raised by the hon. Member for Greenock and Port Glasgow (Dr. Godman) is precisely one that could feature in the recess Adjournment debate.

Mr. John Browne: Does my right hon. Friend accept that there is a great problem in Winchester whereby central Government are calling for the building of 65,000 new homes in an area where there is insufficient local infrastructure to cope? The proposed buildings are far in excess of the number wished for by the local authorities. Does my right hon. Friend accept that this is a national problem in two respects? First, the decision grossly overrides locally expressed democracy. Secondly, it will divert valuable and much-needed resources from the north and midlands to an area where an excess number of these homes are being built. May we have a proper debate on that subject?

Mr. Biffen: I am afraid that I cannot offer a debate within the time scale that we are considering. I shall refer my hon. Friend's point to my right hon. Friend the Secretary of State for the Environment, because it is the Department of the Environment which is capable of dealing with that problem.

Mr. Jeremy Corbyn: Is the right hon. Gentleman aware of early-day motions 1043, 1049 and 1066 on the position in Chile?
[That this House, condemning the continuing oppression in Chile, expresses its full support for the working people of that unhappy country in their national strike on 2nd and 3rd July; and congratulates them on their courageous struggle for freedom and democracy.]
[That this House supports the objectives of the National Civic Assembly of Chile, which is calling for a return to democracy and an end to military dictatorship in that country; and deplores the repression of political opposition and dissent being carried out by the military rulers of Chile.]
[That this House is alarmed at the reports from Chile of police brutality, arrests and charges against the organisers of a national day's protest; and further calls on Her Majesty's Government to cease all military contact with Chile and to recall Her Majesty's Ambassador.]
Does not the right hon. Gentleman feel that it is essential that, before the end of this session, there is time for a full debate on Britain's relationships with Chile, on the use by the British military of Chilean bases as part of the Falklands enterprise and on the sale by British companies of arms to the Chilean Government, which are used to kill people on the streets of Santiago who are protesting against the military dictatorship which has overtaken that country?

Mr. Biffen: The hon. Gentleman thoughtfully sought a debate before the conclusion of this Session. Clearly, that subject could be considered when we come to the overspill, but it cannot feature in the business between now and the recess.

Mr. Tony Banks: I know how the Leader of the House felt when he lost in Coventry. In 1970, I lost by the odd 26,000 votes in East Grinstead. Is

the right hon. Gentleman aware of the concern expressed by both sides of the House that, when next week we debate secretarial and clerical allowances, the House will he asked to break with the agreed formula? Is the right hon. Gentleman aware that these additional resources are desperately needed by hon. Members on both sides of the House, especially those who represent inner-city constituencies where the problems can be weighed, there are so many of them? Is he aware also of the scurrilous allegations which have been made? Ian Aitken made one in the Guardian. If some hon. Members are not using their allowances as they should, why should not all the allowances be paid through the Fees Office? We desperately need that money. We need the resources to represent our constituents. When will we have the vote? On what shall we vote?

Mr. Biffen: Most of the hon. Gentleman's points relate to the general review of the secretarial allowance — [Interruption.] May I just answer this point? It must be well into July. The debate on the order will concern the uprating for the current year. The formula linkage has broken down because of restructuring.

Mr. Derek Fatchett: Will the right hon. Gentleman arrange for the Secretary of State for Defence to make a statement so that vie can ascertain the progress of the Vickers bid for the royal ordnance factory in Leeds? Will the right hon. Gentleman ask his colleague to square any potential sale with previous statements which show the Government's commitment to privatise the ROF as a whole and not in part? In the same statement, will the Secretary of State for Defence guarantee that the sale will be in line with the Government's competition policy? That sale will result in there being only one tank producer in this country under private ownership, over which the Government would have no control. Is it not about time that the Government played the game squarely by the ROF employees in Leeds, not as they have done over the past month?

Mr. Biffen: I reject the remarks which surrounded the hon. Gentleman's central question. He asked me to request my right hon. Friend the Secretary of State for Defence to make a further statement on that matter. As the hon. Gentleman will appreciate, my right hon. Friend the Secretary of State for Defence answered a private notice question on this matter only a short while ago. Of course, I will refer the hon. Gentleman's remarks to my right hon. Friend the Secretary of State.

Mr. D. N. Campbell-Savours: Can we have a debate on the regional reorganisation of the BBC? Is the Leader of the House aware that the BBC board has taken a most unpopular, unpalatable and unacceptable decision in the view of the northern region by moving Cumbria from the north of England into the north-west'? Is he aware that that decision has antagonised the whole of my electorate and the electorates of the hon. Member for Penrith and The Border (Mr. Maclean) and of my hon. Friends the Members for Carlisle (Mr. Lewis), for Copeland (Dr. Cunningham) and others in the northern region? Even at this late stage, may we have a debate on this matter?

Mr. Biffen: I cannot comment upon the substance of the hon. Gentleman's remarks. However, if he is correct, it shows a remarkable lack of sensitivity on the part of the


management of the BBC and that has been a matter of concern to many on the Conservative Benches for some time. I will examine the hon. Gentleman's points and see what time might be available later in the year.

Commonwealth Games (Boycott)

Mr. Harry Ewing: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
The threat to the Commonwealth games in Edinburgh caused by the boycott by African countries as a result of the British Government's policy towards South Africa.
The importance of this matter can hardly be over-emphasised because many people now believe that the withdrawal of Nigeria and Ghana is likely to be followed by other African Commonwealth states and that might be the beginning of the total break-up of the Commonwealth. It is also important to provide an opportunity to make these African nations understand that the people of this country in general, and of Scotland in particular, are whole-heartedly behind them in their present struggle.
It would be a great tragedy if the African nations were to confuse the Government's policy with the sympathy of the people. The sympathy and support of the British people are wholeheartedly with the people of these African nations. Therefore, it is important that we have time to discuss this urgent matter. In order to demonstrate support for the African nations, many towns and cities throughout Great Britain over the past few weeks have been flying the African National Congress flag.
The matter is specific because it relates to the Commonwealth games. It is urgent because the games are due to open two weeks from today. There is now a real fear that the games will not take place if there are any more withdrawals. You, Mr. Speaker, heard the Leader of the House openly say that there will be no opportunity for a debate on South Africa before the House rises for the summer recess. I respectfully suggest that you, Mr. Speaker, should create that opportunity by granting this application under Standing Order No. 10.

Mr. Speaker: The hon. Member for Falkirk, East (Mr. Ewing) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
The threat to the Commonwealth games in Edinburgh caused by the boycott by African countries as a result of the British Government's policy towards South Africa.
As the hon. Gentleman knows, the decision which I must take in this matter is whether to give his application precedence over the business set down for today or for Monday. I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10 and I therefore cannot submit his application to the House.

ESTIMATES DAY

[IST ALLOTTED DAY] [SECOND PART]

SUPPLEMENTARY ESTIMATES, 1986–87

Class III, Vote 1

European Communities (Budget)

[Relevant documents: Fifth report of the Treasury and Civil Service Select Committee on Budgetary Discipline in the European Community, HC 203 (1985–86); the Government's response to the fifth report in their second special report, HC 508 ( 1985–86).]

Mr. Peter Shore: On a point of order, Mr. Speaker. I would like to raise a point of order which relates to the business about to be called in relation to the Supplementary Estimate in connection with the European Community budget.
The House is placed in an appalling difficulty. Our proceedings are a mixture of farce and scandal. We are being asked to approve an Estimate of no less than £930 million in relation to a budget that has not yet been formally agreed. We all recall that the last European budget of this year was declared to be unlawful and was struck out by the European Court. The present budget has not yet completed its final stages, although I understand that the budget committee of the Council of Ministers agreed it this morning.
The second element of scandal is that no information is available to the House about the composition of the budget or the categories of expenditure which have been approved. I can think of no occasion when the House has been asked to approve the payment of sums of this magnitude in relation to objectives about which the House has no information.
I suggest through you, Mr. Speaker, to the business managers that the debate which is to follow should properly be postponed and that no proceedings should be concluded tonight in advance of full information. Also, the Ministers concerned should come to the House tomorrow morning and make an oral statement at the first opportunity.

Mr. Nigel Spearing: Further to that point of order, Mr. Speaker. You will recall that there was an application under Standing Order No. 10 earlier this week from the hon. Member for Southend, East (Mr. Taylor) which related to a matter on today's Order Paper. As I understand it, the position is even more serious than my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) has stressed. This afternoon the Assembly Parliament in Strasbourg is being invited to pass a budget which, if agreed, will increase taxation transfer in this country from British taxpayers to the European Economic Community by amounts which at present are unknown, because the Government have not made a statement on that point.
I submit that the amount of taxation should be known before we debate the business before us, and should certainly be known before we debate the business that is due to start at 7 pm. As the Government have not yet made a statement, they should make a statement now, otherwise

the business that we are involved in cannot he properly entered into and the powers of this House will be removed without our knowledge.

Mr. Speaker: None of these matters concerns me, as I am not responsible — as the right hon. Member for Bethnal Green and Stepney (Mr. Shore) said— for the business brought before the House. However, I can announce to the House that I have selected the amendment in the debate that follows in the name of the right hon. Member for Worthing (Mr. Higgins) which would, if passed, reduce the vote by £667 million.

Mr. Neil Kinnock: Further to that point of order, Mr. Speaker. I am ready to acknowledge, as every hon. Member should, that you, Mr. Speaker, do not have charge of the business brought before the House. Equally, I am sure that you would be the first to acknowledge that you have primary responsibility for the good order of this House and for assisting in ensuring — although this cannot be your responsibility alone — that the Government do not become irresponsible in their relations with the legislature.
Today we have a conjunction of circumstances in which the body that will, in great part, determine the budget has not made its decision, and which, in its preceding discussions, has given every impression that it is unlikely to make a firm decision. However, we are required today to debate a motion and an amendment to a motion that anticipates the outcome of the budget decisions. We are discussing something that does not exist —[Interruption.] It is all very well for the Economic Secretary to the Treasury to make comments from a sedentary position. I would have thought that any responsible Government Minister would have done his best to ensure that the timing of the debate was such as to make it a debate of substance instead of a debate of speculation.
I appeal to you, Mr. Speaker, to use your good offices to make the Government business managers consider whether it is appropriate in terms of the orders of this House for us to debate the matter this afternoon.

The Economic Secretary to the Treasury (Mr. Ian Stewart): Further to that point of order, Mr. Speaker. I should make it clear that neither the Estimate nor the debate is designed to approve or disapprove of the 1986 European budget. The motion represents a proposal to validate transfers between the Consolidated Fund and the contingencies fund via a method that has long been recognised as satisfactory by the Treasury and Civil Service Committee. The Committee put forward the matter for debate. It does not depend on the size of the European budget because it relates to the collection of levies and duties.
This debate happens to coincide with the day on which budgetary procedures are taking place in Europe. No doubt my hon. Friend the Minister of State, who is taking part in them, will report to the House after the completion of that process—[Interruption.] But that does not affect the proposals on the Order Paper, which do not involve any increase in public expenditure or in payments from this country to the EC.

Dr. Oonagh McDonald: Further to that point of order, Mr. Speaker. In the Supplementary Estimates, it says that the provision of £930 million


is sought to pay agricultural levies and customs duties which will have been collected under the common customs tariff to the European Community, approximately one month earlier than the dates on which they would normally be paid
at the request of the Commission.
We are talking about amounts that are being paid in as our contribution to the Community budget. The point is that we do not know how much the budget is, or what its constituent parts are. We do not even know whether it has been decided upon by the European Parliament. That is to be decided later this afternoon. We have no details before us, and rumour has it that we shall only be told them in a written answer tomorrow.

Mr. Ian Gow: Further to that point of order, Mr. Speaker. I wonder whether my hon. Friend the Economic Secretary was absolutely accurate in what he said to the House a moment ago. We are being asked to approve an enormous sum of money. The motion standing in the name of my right hon. Friend the Financial Secretary refers to payments to the budget of the European Communities for the year ending 31 March 1987.
In my respectful submission, there is at present no such thing as a budget of the European Communities for the year ending 31 March 1987. We have been told that the European Assembly is today debating the budget for the year ending 31 March 1987, and will be able at least in part to decide upon it—

Mr. Terence Higgins: It may not decide.

Mr. Gow: That is true. It is possible that the Assembly could debate the matter all night. It is wrong that the House should be asked to approve a payment of £930 million to a budget that does not exist, and which is wrongly described in the motion as being a budget that does exist. In those circumstances, would it not be better if the debate, including the most excellent amendment standing in the name of my right hon. Friend the Member for Worthing (Mr. Higgins), was held after the conclusion of the European Assembly's deliberations?

Mr. Nicholas Budgen: Further to that point of order, Mr. Speaker. I have two points to make, Mr. Speaker. First, my hon. Friend the Economic Secretary said that the Treasury and Civil Service Committee approved of this procedure. But the procedures of the House are not decided by the Treasury and Civil Service Committee. We may have a view about the matter, but it would be plainly wrong for my hon. Friend to suggest that the Select Committee is some alternative to your authority, Mr. Speaker.
Secondly, when my hon. Friend the Member for Eastbourne (Mr. Gow) was on the Front Bench, he gave a binding undertaking on behalf of the Government that there would be no further recourse to the House for extra funds. He gave that undertaking on behalf of the Government. There is plainly a grave imbalance, if not a constitutional crisis, which the Government must face. It is wrong that they should come before the House with this proposition when they do not know the extent of the change in position, and when the House does not know the extent to which they have gone back on the solemn undertaking given by my hon. Friend the Member for Eastbourne.

Mr. Teddy Taylor: Further to that point of order, Mr. Speaker. The House is being asked to

agree to either the motion or the amendment. It is being asked to give the European Communities either a lot of money in advance, or very little. The motion is based on the premise that there is a cash flow shortage. But at the moment we do not know whether there will be a cash flow shortage after the European Assembly has made its decision. We understand that the budget has left the Common Market without enough money to pay its hills. But it will be impossible for any hon. Member to make a reasonable decision about the motion if he does not know whether that cash flow crisis still exists.
We read in the newspapers that the Common Market budget will give authority for up to 1·4 per cent. to be raised from VAT, which will involve a huge additional sum. But we do not have the slightest idea whether that is the real figure. Hon. Members will find it impossible to decide whether to vote for the motion or the amendment. We know that there was a cash flow crisis last week, but we do not know whether there is a crisis now. We just do not know how much extra money the European Assembly and the Council of Ministers have agreed to take.
Is there any way in which hon. Members can postpone the debate? No hon. Member can know whether there is still a cash flow crisis in the Common Market, although it appears that the Council of Ministers may have solved it by agreeing to an extra £2 billion.

Mr. Dennis Skinner: Do you agree, Mr. Speaker, that during the past few years, and particularly since the Common Market went bankrupt, this constitutional difficulty has raised its ugly head in the Chamber quite a few times? Points of order are being raised because hon. Members feel that they are being placed in great difficulty because the Common Market wants the power when it has not got the money. Hon. Members are always being urged to believe that there should be no taxation without representation, but the Common Market and the Government are cutting across that principle.
There is another problem, in that perhaps the debate is being held today because the Treasury and Civil Service Committee is going on a fact-finding tour next week. I have received assurances that if the debate is postponed, not until next week, when it would be inconvenient for the Committee's members to attend, but until the following week or even later, no inconvenience would be caused to those travelling to all the corners of the world in search of those very important facts. So if there is any question of postponing the debate, I can say that there is no problem, providing that it is held within the 10 days following Sunday.

Mr. Eric Forth: If anything, the position is even more complicated than my hon. Friends the Members for Eastbourne (Mr. Gow) and for Wolverhampton South-West (Mr. Budgen) have pointed out. The date mentioned in the motion is 31 March 1987, and the amount being asked for is supposed to take us up to that period. But the EEC budget runs for a calendar year, from January to December. We are therefore being asked to debate the amount of money before us today, which would take us through until March 1987, when we do not know precisely what the EEC budget for 1986 is, or what it will be for 1987.
Thus I suggest that the position is even more difficult than has been suggested so far. I hope that the House will he given time to consider these issues before being rushed into voting this huge amount of money.

Mr. Ron Leighton: Further to the point of order, Mr. Speaker. We are faced with a difficult problem. The House is accustomed to being continually asked to rubber stamp increasingly large sums of money to the Common Market. We are presently in a state of flux because we are being asked to vote money to a budget which, as the hon. Member for Eastbourne (Mr Gow) has said, does not exist. Would it not be better to postpone this debate until we know what the budget is? Then we would know what we were voting money to.

Mr. Budgen: rose— —

Mr. Speaker: I do not think it will help. The hon. Gentleman has had his say and I now want to have mine.
I appreciate that the House is in difficulty but I think we should proceed by stages. The vote is for a supplementary sum not exceeding £930 million. I have already announced to the House that I have selected the amendment in the name of the right hon. Member for Worthing (Mr. Higgins) who is the Chairman of the Treasury and Civil Service Select Committee. If the House feels as strongly about this as it evidently does, it has a remedy of voting for that amendment.

Mr. Gow: rose——

Mr. Budgen: rose—

Mr. Speaker: It is no good hon. Gentlemen bobbing up and down. I have no power to postpone this debate. The hon. Member for Wolverhampton, South-West (Mr. Budgen) may make his point.

Mr. Budgen: On a point of order, Mr. Speaker. I attacked my hon. Friend the Member for Eastbourne (Mr. Gow) and he is hoping to catch your eye on a point of order to explain that what I said was, perhaps, wrong. I hope that you will be able to see him more clearly in a moment or two.

Mr. Speaker: I am amazed that the hon. Gentleman believes that he may have been wrong, but if the hon. Member for Eastbourne (Mr. Gow) thinks he was, perhaps he will tell us.

Mr. Gow: Further to that point of order, Mr. Speaker. I have no wish to criticise the former Minister of State, Treasury who spoke in last year's debate on 22 October. However, on a point of order, my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) made some observations about what the former Minister said. It may be convenient for the House, and certainly for my hon. Friend the Economic Secretary to the Treasury, if I remind you, Mr. Speaker, of what was said on that occasion by my right hon. Friend the Member for Worthing (Mr. Higgins), whose amendment you have selected for debate this afternoon.

Mr. Budgen: What did you say?

Mr. Gow: I am coming to that. I wish to remind you, Mr. Speaker, of the pertinent question which was put on 22 October by my right hon. Friend the Member for Worthing:
can he"—
that was the then Minister of State—

give us a categorical assurance that the Government will not in any way increase the sums available to the Common Market before those negotiations take place?
The Minister replied:
I repeat"—
[Interruption.] That is what he said—
that I find it impossible to envisage circumstances"— —

Mr. Teddy Taylor: Withdraw.

Mr. Gow: I am quoting from the Official Report and my hon. Friend should not rebuke me for doing so. The Minister said—

Mr. Taylor: What happened to him?

Mr. Gow: My hon. Friend must not lead me astray. The Minister said
I find it impossible to envisage circumstances in which the Government will come back to the House in the way that my right hon. Friend describes"—[Official Report, 22 October 1985; Vol. 84, c. 186.]
My hon. Friend the Member for Wolverhampton, South-West described those words as a
categorical assurance given on behalf of the Government.
I submit that they did not amount to a categorical assurance but amounted to a certain incredulity expressed by the then Minister of State as to what would happen.
If I have the good fortune to catch your eye, Mr. Speaker, I shall explain why I shall be voting in the Lobby for the amendment standing in the name of my right hon. Friend the Member for Worthing.

Mr. Speaker: I think the wisest thing would be to see how the Minister gets out of that.
Motion made, and Question proposed,
That a supplementary sum, not exceeding £930,000,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31s1 March 1987 for expenditure by the Treasury in connection with payments to the Budget of the European Communities not covered by direct charges on the Consolidated Fund under section 2(3) of the European Communities Act 1972, as set out in House of Commons Paper No. 439.—[Mr. Ian Stewart.]

Mr. Speaker: I have selected the amendment in the name of the right hon. Member for Worthing (Mr. Higgins).

Mr. Spearing: On a point of order, Mr. Speaker.

Mr. Speaker: I will take it, but very briefly.

Mr. Spearing: I am much obliged, Mr. Speaker. A moment ago, Mr. Speaker, you said that there was no way in which you could adjourn the debate. May I put it to you that, in the Standing Orders of the House, there is a mechanism which has been inserted over the years when the House meets a difficulty and which could be mailable at this moment. If a Member rises on a point of order arid wishes to adjourn the House on a particular matter, it is within the discretion of the Chair to accept the motion.
As I understand it, if the motion is accepted there is a debate—it may be short or long—on whether the House should proceed to the Question. Bearing in mind what you have heard, Mr. Speaker— that there is a non-existent budget to which the House is now being invited to vote money, the basis of our power — and the fact that we have heard nothing from the Treasury Bench on these points of order—that is unusual and should be marked —I therefore, beg to move, That the debate he now adjourned.
A motion having been moved, That this House do now adjourn, MR. SPEAKER, pursuant to Standing Order No. 28 (Dilatory motions in abuse of rules of the House), declined to propose the Question thereon to the House.

Mr. Speaker: The Question is the motion on the Order Paper. For the third time, I announce that I have selected the amendment in the name of the right hon. Member for Worthing (Mr. Higgins).

Mr. Terence Higgins: I beg to move,
That Class III, Vote 1, be reduced by £667,000,000.
The House is not in bad humour this afternoon, but I do not think that this should in any way diminish the profound importance of the points of order which have been raised. This is a matter of great moment. It provides a clear argument, which I had not anticipated making, in favour of the amendment which I propose.
Clearly if there is no budget at this moment — we have had no sign from the Economic Secretary that such a thing exists—there must be an overwhelming case for supporting this amendment to a motion which would seek to finance something which does not exist. It is sad that the House is not more crowded. If hon. Members had heard what has just gone on, many would have felt grave disquiet at the situation in which we find ourselves and would in due course have been prepared to support the amendment. I certainly hope that they will, assuming of course that the Government do not feel it right—I think they should — to accept the amendment that I have proposed.
If one studies the Order Paper, a slightly strange situation emerges because the amendment in the name of the Opposition is for a reduction of £10,000 whereas mine is for a reduction of £667 million — a slight disparity. None-the-less, I hope that that in no way—not least for the reasons which have just been adduced—deters the Opposition from supporting my amendment in the Lobby this evening. I am heartened by the fact that my amendment has received support from those with views as normally disparate as my right hon. Friend the Member for Taunton (Sir E. du Cann) and the hon. Member for Bow and Poplar (Mr. Mikardo). It commands wide support, and that should encourage hon. Members to vote in its favour this evening.
Before I deal with the substance of the amendment I wish to comment on the procedure under which we are having the debate. The substitution of Opposition days and Estimates days for the old Supply days is, on the whole, working satisfactorily. I am glad the Government have seen fit, on various occasions, to divide those days in half so that we may debate a variety of subjects. I also welcome the fact that the Government have put a motion on the Order Paper that we should have a vote at 7 o'clock. A situation wherein we had a debate ending at 7 o'clock and the vote at 10 o'clock would be reminiscent of the system introduced by the late Richard Crossman wherein we had debates in the morning and the vote at 10 o'clock. I think his memoirs have been of more lasting interest than his procedural reform. The motion that the Government have put down is a convenient one.
I think it is important that members of Select Committees which have an Estimates day should be given

more notice than they are at present. Today, it is a wide-ranging debate in which many hon. Members are interested but, generally speaking, Estimates days are on a subject in which the specific Select Committee has the greatest interest and it may be very difficult for Members to attend at short notice. I hope that my right hon. Friend the Leader of the House will make a note of that point.
Having said that, let me spell out the purpose of the amendment. I do so from the position of one who believes that we are right to be members of the EEC, but, nonetheless, who on this occasion, particularly in the light of the earlier points of order, feels grave disquiet at the way in which it is going, particularly in its financial affairs.
The purpose of the amendment is not to prevent—unless we find that there is not a budget at any stage—the eventual payment of the sums involved. The House will have noticed that my amendment does not cover the full amount of the estimate. The reason for that is that the difference between the two sums has already been paid to the EC regardless of the fact that it does not have a budget.
My amendment seeks to stop the procedure, which would not be repeated, whereby the House is asked to pay to the Community amounts which would normally be paid under the own resources procedure in advance of the due date, but paid not only in advance of the due date, but in advance of the due date without payment of interest, even though, if the situation were reversed and money was owed in the other direction, we would have to pay interest, at a penal rate. So the purpose of the amendment is simply to prevent the payment being made in advance—not the eventual payment of the sum involved. That is something that the House should support.
The main reason, apart from those that I have already mentioned, why the House should support the amendment is that the whole basis on which we have been increasing resources to the Community has been that there will be effective budgetary discipline. But, as the report of the Treasury and Civil Service Select Committee on budgetary discipline in the EC makes clear, the reality is that that has not been effective. If it were effective it would not be necessary to pay the sums in advance. Therefore, the amendment seeks to bring out the fact that the discipline is not working effectively and that we should not make such payments which, as I understand it, we have no legal obligation to make.
We were told last year when the own resources—the VAT payments—were increased from 1 to 1·4 per cent. that there would be no need for such temporary expedients. My hon. Friend the Member for Eastbourne (Mr. Gow), who was at that time in the position of my hon. Friend the Economic Secretary this afternoon replying to the debate, made it clear that once we had increased the own resources there would be no need to have the rather sordid transactions of this kind; that the temporary expedients would no longer be necessary.
The report to which I have just referred makes it clear that budgetary discipline has not been enforced. The Treasury and Civil Service Select Committee has always expressed doubts about that and there is a long history of the matter. Our earlier report on budgetary discipline and the Fontainebleau agreement points to the argument put forward by the Prime Minister that more EC members are becoming net contributors and that that is the best discipline that we could possibly have.
The reality is that that has proved completely untrue. Indeed, the way in which, for example, the German


Government have been operating makes it clear that the fact that people are net contributors has not imposed the kind of discipline that should be imposed. I regret to say that it has not been reflected in the attitude of Her Majesty's Government towards budgetary discipline, even though we have certainly been better than some others, not least in the matter of the illegal budget, and so on, with which I shall deal in a moment.
None the less, I hope that in the light of the earlier points of order the Government will come to the House at the earliest moment when any hard information is available to tell us what is happening in Europe with our taxpayers' money. I hope that if that information is available by 7 o'clock the Government will come to the House—they have an obligation to do so—and tell us the up-to-date position. Be that as it may, it is still right to vote for the amendment. However, at the moment we are relying on press reports on what is happening there. If one then tries to ascertain the position from the Treasury, we are told that no information is available. We do not know where the press reports are coming from, but there are strong signs that we are now very close to the 1·4 per cent. ceiling which was agreed only a short time ago.
That being so, we should raise the question of the communiqué of the then presidency of the European Council following the Fontainebleau agreement. That said:
One year before the new ceiling is reached, the Commission will present a report setting out the state of play on:

—the result of the budgetary discipline
—the Community's financial needs
—the breakdown of the budgetary costs among Member States".

If indeed we are approaching that 1·4 per cent. figure, we should ask whether the Commission is proposing to make such a statement. I hope that my hon. Friend the Economic Secretary will be able to tell us about that.
But the fact is that the Estimate we have before us this afternoon is much larger than any of the previous such Estimates. It goes on for a much longer period and is based on various criteria of acceptability which the Government have in no way stated, and that is clearly unsatisfactory.
In particular, the report on budgetary discipline to which I referred points out that that discipline is simply not working. I refer in particular to paragraphs 6 and 7 of our report. That brings out clearly the way in which the Council of Ministers has not been prepared to stick to the guidelines to which it agreed. Indeed, paragraphs 6, 7 and 8 of the report spell out in detail the way in which it has constantly increased the resources against the view that budgetary discipline should be imposed. On top of that we have had the clear conflict between the Council of Ministers on the one hand and the Parliament or the European Assembly on the other.
We had the case of the budget being taken to the European Court which, as the House will know, has now held that it is illegal. Therefore, at this moment, we have no legal budget for the Community. There are many worrying aspects of that. To start with, the court's judgment effectively said that nothing could he done about the money that had already been paid out. It is not the least bit clear why there cannot be a corresponding reduction in the future. However, as far as I know, no such recommendation is being put forward by the Government,

still less by other members of the Community. The court effectively says that payments that have already been made under the illegal budget none the less remain valid.
Let me ask my hon. Friend the Economic Secretary a specific question. Does that mean that the funds that have been affected by the interim result which we got in the court will now go back to the EEC? If so, it would he the height of absurdity. The whole area is deeply and profoundly disturbing. The tendency on these occasions is almost to laugh because otherwise one would virtually burst into tears about the affair. It is getting more and more worrying. I am bound to say that it is unfortunate that the Government, and in particular the Prime Minister, who takes such a clear and forthright attitude on other issues, which I shall not enumerate, are failing to do so with regard to control of public expenditure in relation to the EEC. There is effective control in many other areas, not least health and social services, and so on, but not so with regard to Europe.

Mr. Gow: There may be some slight misunderstanding in my right hon. Friend's mind. It is not that my hon. Friend the Economic Secretary when he had responsibility for these matters, or my hon. Friend the Minister of State, Treasury, or my right hon. Friend the Chancellor, let alone my right hon. Friend the Prime Minister, have been anything other than resolute at every meeting of the European Council, of ECOFIN and of Ministers. The problem is that Her Majesty's Government are always in an actual minority.

Mr. Teddy Taylor: What about Monday?

Mr. Gow: However resolute my right hon. Friends are — and they have been totally resolute in championing our interests— they cannot bring about that discipline that my right hon. Friend and I want to see.

Mr. Higgins: I note what my hon. Friend says. I want to make two points about that. I hope that the Economic Secretary will tell us how close we are to the 1·4 per cent. limit. We were told previously in the communiqué following Fontainebleau that the maximum take may be increased to 1·6 per cent. on 1 January 1988 by unanimous decision of the Council and after agreement with national procedures and so on.
The clear import is that we have a right of veto. I hope that my hon. Friend will confirm what is implicit in the reply that the Treasury and Civil Service Committee has already had from the Government, that we shall use our veto to prevent any increase above the 1·4 per cent. limit.
The Treasury and Civil Service Committee, an all-party committee, has clearly said:
We therefore recommend that the government should make clear its intention of using its veto against any proposal to raise the VAT ceiling, and of declining to support any further substitutes in the form of Inter Governmental Agreements.
I very much hope that the Government will give a clear undertaking on that because I think that it would meet the point that my hon. Friend the Member for Eastbourne made in his intervention.

Sir Russell Johnston: Does the right hon. Gentleman agree with my recollection that the veto has never yet been used in the Council of Finance Ministers and that, if we did use it, we would set a new precedent? Does he not further agree that, if that is


the approach to majority decision making with which we start off, there is little hope of the internal market being achieved?

Mr. Higgins: Majority decision making is a matter that no doubt the House may well have occasion to debate later, as it has on occasions recently.
In all events, with regard to financial matters and increasing the 1·4 per cent., it seems clear to me that we should have the right of veto, otherwise the power of taxation is taken from the House, and I do not think that that is something to which hon. Members ought to agree.
None the less—and I stress the point — there is a fundamental problem in regard to the treaty on expenditure, on revenue and on borrowing. The Chancellor of the Exchequer is fond of saying—I might almost say ad nauseam—that revenue must determine expenditure, not the other way about. The problem that arises in the EEC at present is that the spending goes on and on because the budgetary discipline is not effective and one comes up against restraint on revenue only when one hits the VAT ceiling. There is clearly a conflict there, not least because, as my right hon. Friend the Prime Minister has pointed out from time to time, it is contrary to the treaty for there to be borrowing by the Community to cover the difference between revenue and expenditure. We know that devices have been used to get round that —something that I believe is deplorable.
There is a fundamental problem here, and we have to get the matter under control. I believe that that control ought to be exercised on the expenditure side, but particularly in regard to giving cash to the Community. We must consider whether some amendment of the treaty is needed to bring that about. Failing that, whenever we hit the VAT ceiling, I believe that we are in a position to exercise authority, and that is very important. If it runs the Community into a problem, no doubt we will have an opportunity to reappraise the situation. The situation tonight is one in which, because the budget has been declared illegal, we ought to have a real opportunity to get a grip on the matter. There will be bitter disappointment and resentment if the Government miss that opportunity when they come to the House to give a statement on what has been going on in Europe this week and in the course of the conclusions of the budget.

Mr. Spearing: Can the right hon. Gentleman confirm the position as I understand it? He said that, if and when it is desired to raise the VAT ceiling, the House and the Government have to agree because it requires a unanimous decision of the EEC. Am I not right in thinking that if expenditure within or up to that limit is to be raised —and we understand informally that this has been done — it requires not unanimity but a majority, maybe against United Kingdom Ministers, in the Council of Ministers and in the Assembly, and it need not even be debated in this House or intimated to this House? If that is so, has not this House therefore already lost control of taxation up to those limits?

Mr. Higgins: No doubt my hon. Friend the Economic Secretary will clarify the point that the hon. Gentleman has raised, which I believe is right, but of course we run into the situation in which, when we hit the limit, we can effectively exercise a veto. We were told anyway that there

was no question of this until 1988, yet here we are in the middle of 1986 where, in respect of budgetary discipline and the recent increase to 1·4 per cent., the ink is scarcely dry on the agreement—that is, if it was indeed signed, and it is difficult with some of these documents to know whether that is so.
This is a profoundly important amendment. Given the uncertainties about the budget, I think that the case for supporting the amendment is even greater. As I have said, it is unfortunate that the House is not more crowded so that other hon. Members might appreciate the grave situation that is developing. Given the uncertainties of the situation, I hope that the Economic Secretary either will not wish to proceed with the motion or will accept the amendment. We must consider this against the background of public expenditure priorities generally. At a time when many of our constituents are being asked to suffer severely as a result of restraint on public expenditure, of which I approve, it is proposed that money should go off in this way and the Government make an interest-free loan of £667 million, but I can think of a great many other people who might better benefit and who better deserve an interest-free loan of £667 million than those to whom the money will go if the motion is approved.

Mr. George Robertson: We have had an incredible start to the debate. The Minister may have thought that it would be an uncontroversial, technical debate on what are fairly fundamental recommendations by the Select Committee, but it has turned out to be something very different. These incredible exchanges reflect the fact that, by coincidence, there is today the meeting of the European Parliament that will endorse or otherwise the decisions of Finance Ministers. As hon. Members on both sides of the House have said, the Government have an obligation to inform the House, and they should be doing so now, not waiting until later to tell us precisely what is going on in Europe.
The reply by the Government to the Select Committee report makes it clear that the court action that has just been concluded in the matter of the European Parliament was designed precisely to make sure that the European Council of Ministers was the arena in which decisions about the budget were to be made. The Treasury memorandum in reply to the observations of the Select Committee makes it clear that the Government would certainly think it necessary for the Council to examine the relevant treaty articles with a view to reinstating an acceptable balance of budgetary powers between the Council and the Parliament.
The European Parliament will today be in possession of the information about the new 1986 budget, and will have all the details about the excesses over and above the budget discipline levels. It will make a decision before the House of Commons knows what is the outline agreement decided upon by British Ministers and other Ministers. That is outrageous and unacceptable to the House.
The Economic Secretary no doubt hoped that he was well away from these debates. European budget debates must be one of those things that one hopes one is promoted out of, can resign out of or, if necessary and one can get away with it, can be sacked out of it. Unfortunately, the Economic Secretary is here having to defend a deplorable state of affairs.
This Estimate is nothing new. We have been here before. One has almost a sense of deja vu and loses track of which debate we are in because they are all so similar. We have the same speeches made by the same hon. Members on the same subjects, but nothing is done. We are told that things will improve and will be fundamentally changed. The Economic Secretary wrote an article last December for The Times, which appeared on the leader page, and for which no doubt he got a fee. In it, he said that everything would change permanently and things would never be the same again. We have budget discipline, and the Fontainebleau agreement will last until the end of time. That was it. Everything had been done and it was all due to the Prime Minister and the Economic Secretary. They took the credit for it. However, the debates continue, the same issues come up and the same sad commentary is made.
Supplementary budgets, intergovernmental agreements, non-reimbursable payments, reimbursable payments, reimbursable payments that are never repaid — they all happen, but this debate takes place in the context of an even more spectacular shot in the foot. Not only are we being asked to vote vast sums of money to the EEC in advance of the time of the due payment, but we are being asked to do so in the wake of the incredible judgment by the European Court of Justice.
The other part of the Treasury double act came to the House of Commons recently to tell us that we had to make extra supplementary payments to the European Community because of an illegal budget declared by the European Parliament. Although it was illegal and the Government would take the European Parliament to court, we were asked, and the huge 140 majority of the Government got it through, to authorise supplementary payments in lieu of the illegal amounts of money that the Government said that they would bring back to the country.
The final judgment was delivered a week ago, and the Government had won their case, but the result has been not to bring more money back but to pay more to the European Community, because that is what the Financial Secretary is busily engaged on today. He is not saving money for the country or getting a better deal for the taxpayer, or telling the European Parliament that it must hand all that money back so that the British taxpayer will be better off. Instead, he will tell the Parliament that he agrees with the illegal budget, but that he thinks that it is too modest. What was wrong with the illegal budget was that it did not ask for enough. We shall now give more for the 1986 budget, and goodness knows what we shall give for the 1987 budget.
In our last debate on this subject, we were told of the illegality of the European Parliament's action. We were told that it was iniquitous and impertinent of it to overrule the Council of Ministers and that it had no right to levy this outrageous amount on the British taxpayer. Like Liverpool and Lambeth councillors, European Members of Parliament would be pursued until they coughed up all the cash of which they were robbing us.
We were told that an illegal bill of 160 million ecu was being foisted on the British taxpayer. The lawyer for the British Government in the European Court of Justice said that that was the equivalent to the cost of four large hospitals and 150 new primary schools. That is not Opposition qualification, but a Government description of

the amount of money of which the country had been robbed by the illegal, outrageous action of the European Parliament.
The hapless Minister was torn apart after he had told us that, but now we know that it was all sanctimonious humbug. The Government have won the court action that we are told is a great triumph. Some triumph. First, the judgment did not devastate the European Parliament. The Financial Times said:
The judgment amounted lo an implicit reprimand for both institutions.
The Advocate-General of the European Court of Justice, Mr. Frederico Mancini, said that the budget Ministers of the member states were also guilty of "unlawful conduct" when they failed to provide enough money in the budget for all the commitments.
Now, we have a lasting triumph before us, or we would do if the Government had the decency to tell us what figure was agreed in Brussels yesterday and was being put forward in Strasbourg today. The House of Commons Library — I do not know whether its sources are any better than those for the information given to hon. Members—says that the total size of the new budget is about 2 billion ecu more than the Council's second reading, with agriculture accounting for 1,100 million ecu and the increased structural funds for 750 million ecu. We are told that, because of technical reasons, the structural increase will be more than that.
This is the great triumph of the British Government over the impertinent European parliamentarians who dared to declare an illegal budget. More money will be paid than was challenged in the court action. The new budget is bigger than the first European budget, against which the British Government voted. The difference will be a donation from the Government and the House of Commons in place of four new hospitals and 150 primary schools. Not only is the new budget figure larger, rounder and more open-ended than the one that so outraged the Minister on the last occasion, but it blows a giant hole through the much-vaunted budget discipline which supposedly was the great achievement of the Fontainebleau summit.
The report of the Select Committee on the Treasury and Civil Service mentioned in the speech of the right hon. Member for Worthing (Mr. Higgins) amply illustrates the way in which the budget discipline about which we heard so much is virtually worthless. In the first year of its operation, the budget is well over the top, and the first draft supplementary figures suggest that the budget discipline minutes will be exceeded by at least 740 million ecu. Once we hear the details of the deal done yesterday in Brussels, that will pale into insignificance.
Although the Treasury apparently does not have any details to give the House of Commons, on the 8 o'clock BBC radio news this morning, the Financial Secretary to the Treasury described the new budget as a "victory of common sense". It will be well worth putting those resounding words to the House to see whether Members of Parliament agree with that verdict.
The budget will provide yet more funds, but even they might not be sufficient for the social and regional funds that the European Parliament so outrageously added, which the court overruled, and which the Government tried to veto when the first budget was decided.

Sir Russell Johnston: I am surprised that, in referring to the increase in agricultural spending, the hon.


Gentleman has made no reference — nor did the right hon. Member for Worthing (Mr. Higgins) — to the change in the relationship between the dollar and the ecu, which it has been calculated has added 1·2 million ecu to the size of the budget. That is one of the central reasons why budget discipline has to be breached.

Mr. Robertson: Of course it is. That was always the way in which it was going to be breached and that was always the way in which we said that it would be breached. The trend that has broken budgetary discipline in the way described by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) is precisely this gigantic bill for agriculture, which will increase yet further as inflation continues to go down in the European Community and as the dollar continues to weaken against the ecu. The bill will inexorably be increased. It will squeeze the very funds which I am sure the hon. Gentleman regards as being infinitely more valuable in the context of the European Community than the piling up of yet more and more food mountains in EEC countries.

Mr. Budgen: The hon. Gentleman will recognise that the Liberal party adopts a very progressive attitude towards this question. It says that the take from VAT ought to be increased to 2 per cent. as quickly as possible. I should have thought that the hon. Member for Inverness, Nairn and Lochaber would be delighted at the prospect of our climbing quickly towards 2 per cent. by these various methods of agricultural support, which he thinks is such a good way of spending money. But what does the Social Democratic party say?

Mr. Robertson: I am sure that the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) will be taking back all these commitments to those vast numbers of his colleagues who never attend these debates and who leave him here as their sole spokesman. No Social Democratic party Member has so far attended this debate. We shall look with eager interest to see whether any of them turn up for the vote at the end of it, or for the guillotined debate that is to take place after it. The Social Democratic party professes undying support for the European Community and a commitment to its objectives, but that does not run to turning up at debates when a matter of crucial importance — the future of the Community and the way in which it is organised—is being debated.
The new budget would be even worse were it not for the fact that we know, because we have already seen the preliminary draft budgets, that it involves an element of creative accounting, which will postpone spending from this year; it will be counted instead in next year's, budget. As the hon. Member for Inverness, Nairn and Lochaber told us, there will be much more bad news. As inflation goes down in the European Community, as the VAT take therefore decreases and as the dollar continues to weaken, the cost of the ruinous farm policy will explode upwards and upwards.
In the context of European budgets, I was intrigued to read recently what was said by the president of the European Court of Auditors, Mr. Marcel Mart, when he appeared before the Council of Finance Ministers. The court audits the accounts at least two years after these outrages. Of the 1984 EEC accounts he said that, were

these the accounts of a private company, he would be unable to approve them. Even within the context of this great business-managing Government, the accounts do not square up.
We can see precisely in front of us today what the Court of Auditors really meant. We know now what the court action in Luxembourg meant. It was a time-wasting, hypocritical smokescreen that postponed and disguised the incompetence and even the deceit of the Finance Ministers, who deliberately left out of the 1986 budget items which they knew were necessary and which had been committed in advance. It is small wonder that the Advocate-General accused the Council of Ministers of a "violation of the rules" in placing the European Parliament in that position.
I underlined in our last debate—when the Economic Secretary's colleague came here with his begging bowl and bullet-proof string vest — that he was engaged in a confidence trick. He knew that the Ministers, not the European Parliament, had created the crisis. He knew that they had clipped the budget too tight for the accession of Spain and Portugal, for the burden of the past and for the inevitable, inexorable, inexcusable and insatiable demands of the common agricultural policy. He simply deflected the malicious incompetence of the Ministers on to the heads of the European parliamentarians. However, he is exposed now in the light of the judgment of the European Court, not just by the Advocate-General but also by this truly remarkable and bizarrely inflated budget, which was agreed last night by the Finance Ministers.

Mr. Forth: Will the hon. Gentleman give way?

Mr. Robertson: No. I am already exceeding my time limit. It is a very brief debate and it would be unfair to other hon. Members if I gave way, however appreciative I might be of the point that the hon. Gentleman would make.
It was almost three years ago, in December 1984, that this House endorsed the Fontainebleau agreement. It did so because it was told by the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind), who is now a member of the Cabinet, and by the Financial Secretary to the Treasury, who thought that he had escaped from all this, that we had a guarantee of budget discipline, especially on farm spending. We remember how the Economic Secretary argued so valiantly with his right hon. Friend the Member for Worthing (Mr. Higgins) about the vagueness of the assurances that had been given. He pointed out how sensible and straightforward they all were and said that there was no escape from them. We were told that the increase to a 1·4 per cent. VAT limit and that the 40 per cent. increase in European Community spending would be more than sufficient for at least two years, until 1988. And of course we were told by the Economic Secretary as well as by the hon. Member for Eastbourne (Mr. Gow) that we need not expect any other supplementary budgets. However, each of these undertakings has been broken. Even the luckless, hapless Financial Secretary, who was not even around when these fine promises were made and who has had to carry the can for the Prime Minister, knows that each of these promises has been punctured.
Budget discipline is worthless. Six months into the first year of its operation it is at least 740 million ecu over the top; and it is only that because the figures have been


fiddled and because the damage has merely been postponed. Effectively we are within a whisker of, and probably in real terms we are over, the 1·4 per cent. VAT ceiling. The President of the Commission, Jacques Delors, said in February of this year:
I would be failing in my duty if I did not point out to Parliament"—
that is, the European Parliament—
and our 12 governments that VAT own resources must break through the 1–4 per cent. barrier if the Community is to achieve the objectives solemnly adopted in Luxembourg last December.
That is what will face us in the future.
The assurances on the intergovernmental agreements and supplementary budgets were no more than, to quote the Paymaster-General, "piffle." The assurances that the hon. Member for Eastbourne gave us in the debate last October have been adequately dealt with by him. No doubt, if he catches your eye, Mr. Deputy Speaker, there will be even more disclosures.
This budget, if we are allowed to know about it, will be like so many of the old ones. There will be more spending on agriculture. It will automatically eat up more and more money in order to produce less and less food for eating and more and more food for storing and destroying. The Foreign Secretary had the cheek to go to the European Parliament this week and tell it:
We cannot expect our citizens to see the Community as a force for good in their own lives when they see and hear regular reports of thousands of tonnes of butter ageing in the stores or being disposed of at a fraction of its earlier value.
Sanctimonious criticism is there by the bucketful, but action is pitifully absent.
Whenever it may be that we find out about it, the budget will show yet again that even more is to be spent on agriculture and that the cash mountain is to become even larger. The amounts that will be spent by this job-starved European Community on the social fund and the regional fund will go up by tiny amounts, but by less than the rate of inflation, and down will go spending on research and on energy, and down also will go the trivial amounts that we spend on overseas aid — presumably only on the principle that we should leave all that to Bob Geldof.
Tonight — and it is only one of far too many occasions—is a humiliation for this Government and a punishment for this country. The Government see that their priorities have been devastated. They see their court action exposed as a charade and as a contrived pantomime for which the taxpayer has to pick up a substantial tab. Instead of the four new hospitals and 150 new primary schools which were tantalisingly offered to us as the price of this great legal victory, there are bigger butter mountains and more grain stores. The debates are becoming simply an exercise in futility, with Ministers of the Crown queuing up to unload their prepared scripts of excuses and then relying on a 140-strong majority to get the supplementary budgets through.
This debate is a vivid proof of those words. Fontainebleau, budget discipline, controlled agricultural budgets, sensible spending plans, a long-term financial future for the Community are all dead—as dead as the Minister's explanations and as dead as the Government's reputation. I hope that the entire House will vote for the amendment.

Sir Edward du Cann: As the hon. Member for Hamilton (Mr. Robertson) said, there were some remarkable exchanges at the outset of the debate. That puts the point most mildly. To anyone who loves our Parliament, and believes that a proper surveillance of the expenditure of taxpayers' funds is a primary duty of hon. Members, the people's representatives — to whom else can the people look? — to those of us who regard ourselves as trustees for the public good, and believe that we abdicate responsibility if we arc careless in those respects, the arrangement of the debate, whereby we are invited to vote on expenditure before we know the shape and total of the budget of which it will be part, is not merely profoundly disturbing, it is a scandal. I want none of it. My hon. Friend the Member for Eastbourne (Mr. Gow) was entirely right to say how robust our Ministers are when their duties take them to Brussels and to the European Community. But it is high time for them to say to their colleagues there that we can no longer proceed in this careless way. It is time for us to back them and to refuse to put up with the procedures any longer.
I endorse most warmly the views of the Treasury and Civil Service Select Committee which were expressed so well by its Chairman, my right hon. Friend the Member for Worthing (Mr. Higgins). In a wholly admirable speech, he quoted a little from the Committee's fifth report. It should be compulsory reading in the House, if not outside it. I wish to underline some of the report's statements. The first paragraph makes it clear that the report is the third of its kind that the Committee has recently made available to the House. Paragraph 1 states:
One underlying theme connects all these exchanges: the need for effective Budgetary Discipline in the EC.
Paragraph 2 mentions
the seriousness of the threats under which Budgetary Discipline now lies.
Paragraph 5 mentions
the lack of authority behind the Budgetary Discipline Agreement.
Paragraph 8 states:
The Budgetary Discipline Agreement has not worked as intended.
The report makes the further suggestion that
it will he for the UK as president in office of the Council to put together a viable political initiative to see that matters improve and do not deteriorate further.
Paragraph 10 implies that budget discipline is very much at risk.
Paragraph 14 states:
We cannot avoid the conclusion that the Community will be fortunate to avoid a very serious crisis.
In paragraph 18, the report mentions the "upward drift in expenditure".
Paragraph 20 mentions,
'a well-known fact' that certain states arc in favour of larger budgets.
Paragraph 19 states:
It is only prudent to recall how strongly the tide of events has begun to run in the direction of a 1·6 per cent. ceiling.
Paragraph 21 mentions
pressure of expenditure.… arid the expansionist view of a significant portion of the Council.
The report then mentions the need to exercise the veto.
I endorse all those conclusions. The report is a most serious and important document. I repeat that it is not the first time that my right hon. Friend the Member for


Worthing and his colleagues, on behalf of the House, have told us and told the Government plainly what the position is.
It is a devastating report. What sort of response did it elicit from the Government? I have the Government's response in my hand. It is a mere couple of pages of cyclostyled material. I regard the Government's response to that significant report as profoundly disappointing for two main reasons. With the exception of the use of the phrase "budgetary discipline" in its headline, it is silent about the matter. Right hon. and hon. Members may think it incomprehensible that a senior Select Committee of the House makes important observations and recommendations about budgetary discipline and that the considered response of the Government does not contain a word about budgetary discipline.

Mr. Spearing: I hesitate to make the position worse, but does the right hon. Gentleman recall that the Select Committee on European Legislation, which considered the proposals made after Stuttgart for alleged budgetary discipline, made it amply clear in its reports to the House that the budgetary discipline procedure had no treaty force whatsoever? Nevertheless, the House accepted the upward breaking of the 1 per cent. limit despite the fact that that Committee made it amply clear that budgetary discipline was not enforceable by treaty commitment.

Sir Edward du Cann: The hon. Gentleman does the House a service in reminding it of that point. His intention was, no doubt, to emphasise my point that it is astounding that the Government are silent on the subject.
The other reason why I believe the Government's response to my right hon. Friend the Member for Worthing and his colleagues to be so disappointing can best be put by quoting from the third paragraph of the three Government observations. It states:
The Government has stated that it sees no case for increasing the resources available to the Community.
That is what is said, but that is precisely what the House is now invited to do through the mechanism of payment in advance. I do not understand how on earth that squares with those observations. If the payment were conditional on better discipline, effective supervision and a tighter control of Community expenditure, one might acquiesce. As it is not, it is impossible to do so. Frankly, it is an insult to the House to be invited to do so.
I go further by saying that the entire matter is, in effect, an insult to every hon. Member who has tried to play a part in bringing about a better and more effective supervision of domestic expenditure by the Government, whether we speak of the work done by the Public Accounts Committee, the departmental Select Committees or other hon. Members who attend to these matters in what they believe to be the proper public interest.
As the hon. Member for Hamilton and my right hon. Friend the Member for Worthing said, when the increase in own resources was agreed it was done on specific and clear conditions. The first was that there would be strict budgetary controls. The second was that the rate of increase in farm spending would be curbed. I would-have thought that a reasonable proposition. The third was that the additional cash from increasing the VAT provision from the lower level to 1·;4 per cent. would last for several years.
As my hon. Friend the Member for Eastbourne (Mr. Gow) so modestly reminded us, at the time Ministers were entirely clear on that point. It was honourable of him to make those points. He quoted the Minister who said that it was unthinkable that the Government would come back to the House for more cash. As my right hon. Friend the Member for Worthing said, the unthinkable has become fact in less than a year. We are only six months into the first year of the strict budgetary control regime that we were promised. It is almost unbelievable that we have received no account whatsoever from the Government as to the reasons for the extra expenditure. Funds are already exhausted and various countries and, as we have noticed, the European Assembly clamour for further expenditure.
There is little effective scrutiny over expenditure. As the hon. Member for Hamilton said, agriculture is the most obvious example of that. Despite the public interest aroused in the matter, there is even a proposal to cut overseas aid to give the farmers on the continent more money. That is an incomprehensible proposal. The European Community is, in effect, in a crisis which is the equivalent in private industry of continuing to trade while insolvent.
Many hon. Members like myself were sceptical of the wisdom of Britain signing the treaty of Rome, but we have nevertheless worked and argued since then in an attempt to turn the European Community into a practical reality of the dreams of its founders. However, it is now time to voice a solemn warning. Those who connive at the present state of affairs risk massive public disenchantment with Britain's membership of the European Community. Our people will not tolerate higher taxes or, for example, the imposition of VAT on food, books and newsprint, as would come about with the ending of the zero rate, which is being challenged in the courts, to finance wasteful policies. Parliament should not tolerate such a state of affairs and the Government should not invite it to do so.
As my right hon. Friend the Member for Worthing said, it is essential that we retain the power of veto over taxation. I hope that my hon. Friend the Economic Secretary to the Treasury, in whom many of us have great faith and whom we admire, can give the House a clear assurance on that issue this evening.
To be perfectly plain, there is a major risk that the European Community will not survive a worsening or even the continuance of the present careless financial situation. The most constructive action that the United Kingdom could take to support the European Community would be to demonstrate that we will no longer tolerate mismanagement on this grand scale. Sometimes one must be a little cruel in the short term to be kind in the long run. Sometimes it is right to protest. Action now could possibly prevent disaster later. The House should make no mistake about it. Disaster is inevitable if things continue as they are. It is for that reason that I shall vote for the amendments, and in particular that standing in the name of my right hon. Friend the Member for Worthing and other members of the Treasury Select Committee. I hope that a majority of hon. Members on both sides of the House will do the same.

Sir Russell Johnston: Before I comment on the amendment tabled by the right hon. Member for Worthing (Mr. Higgins) and before I


consider the report of the Treasury and Civil Service Select Committee, which he chairs, I should like to make three preliminary points.
First, the hon. Member for Hamilton (Mr. Robertson) was correct to say that alliance Members have long argued in favour of a larger budget for the European Community. In 1978, the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), then President of the European Commission, argued for a 2·5 per cent. ceiling on VAT. I remind the hon. Member for Wolverhampton, South-West (Mr. Budgen), who has temporarily left the Chamber, that when his political colleague, Mr. Tugendhat, succeeded to the Commission early in this decade, he argued for a 2 per cent. ceiling.
The ceiling is now 1·4 per cent., although until now no country has paid more than 1·25 per cent. The United Kingdom pays 0·72 per cent. because of the budgetary agreement achieved by the Government. Although it is true that the budget will reach the 1·4 per cent. ceiling, the United Kingdom will not pay that. Even if the ceiling rises to 1·6 per cent., as forecast by the right hon. Member for Worthing, it is doubtful whether the United Kingdom will pay more than 0·82 per cent.
The hon. Member for Hamilton was correct to say that we have argued in this way as we wish to see an expansion in the structural funds—for example, the regional fund and the social fund. Without effective contributions to the regional fund, I do not see how economic development can be achieved in the poorer parts of the Community. I refer especially to Portugal. Hon. Members applauded loudly when the dictatorships of Salazar and Caetano ended, and Portugal joined the European Community. It is all very well to give political applause, but if economic encouragement cannot also be offered to them as a consequence of their joining the Community, similar political dangers might recur.
There is no doubt that the capacity of the social fund to assist the older industries in the north is important, as is research and development. Hon. Members have often commented that the European Community can, but does not, compete effectively with the United States and Japan. We shall be unable to do so unless we get our act together, and we cannot do that on the projected expenditure on research and development within the Community which I have seen, as I am sure has the Minister, in the forward projection of the budget to 1990.
Secondly, alliance Members have pressed strongly for the containment of the common agricultural policy. The failure to achieve this is as much due to our Government, although they have recently improved in this respect, as to the Governments of other member states.
My hon. Friend the Member for Truro (Mr. Penhaligon) never tires of reminding the House that when the Secretary of State for Energy was Minister of Agriculture, Fisheries and Food, he told dairy farmers that they could improve their income by expanding. That was just three months before the introduction of milk quotas. Responsibility can always be shared, but we now have the introduction of milk quotas, and of the co-responsibility levy for wheat, although admittedly at a low level. A clear, if slow, beginning has been made, but anyone who thinks it is possible to change the CAP overnight is a fool, because it cannot be done.
Incidentally, I understand that the Commission is coming to the United Kingdom en bloc next week, mainly to attend one of Her Majesty's garden parties. However,

I understand that the Commission's President, Jacques Delors, who is a workaholic, has decreed that the Commission will spend a whole day at Lancaster house contemplating the CAP. I hope that that will produce some action, because there is no doubt about the urgency of the problem. However, at the end of the day the decision will rest with the Council of Ministers. The Council of Agriculture Ministers is in many respects more important than that of the Finance Ministers.
Thirdly, the right hon. Member for Worthing defined what has happened or what is in the process of happening to the budgetary discipline agreement of Fontainebleau. He said this was not worth the paper that it was written on and his report also says that. He might also argue, and I would not be prepared to disagree with him, that the Fontainebleau agreement on budgetary discipline was very moderate. It was not what one might call draconian, but simply said that farm spending increases should not exceed growth in new resources.
I still hold to what I said when I intervened during the speech by the hon. Member for Hamilton, that it would have been proper for the right hon. Member for Worthing to speak about the change in the rate between the ecu and the dollar. When one considers that that change has cost 1·2 million ecus, which is equivalent to 3 per cent. of the total Community budget, one can see that it certainly falls under the definition of aberrant circumstances, to use the clumsy phrase that has been criticised before, and justifies some special action.
I shall now turn to the amendment and the report. Towards the end of his speech the right hon. Member for Worthing spoke about "reality," and about
getting a grip on the whole matter.
Reality necessitates embarking on a settled programme of adjustment of the CAP to reduce surpluses and cut expenditure. That is the reality. One of the things that I find unacceptable in the report is contained in paragraph 11. It is printed in black type in case we might skim over it, because sometimes hon. Members skim over reports. The paragraph says that the Government should come to
the House at the earliest possible opportunity for support in a proposal to amend the Treaty or take any other necessary steps to vest budgetary control securely and finally"—
I should like to repeat that—
and finally in the Council.
That is an unreality because when the treaty of Rome was established in 1957 it gave the European Parliament a built-in part of the budgetary decision. It is not a very large part because it is equivalent to only about 12 per cent. of the budget and the budget itself—let us get this in proportion — is only 1 per cent. of the European Community's gross national product, or approximately 2 per cent. of the total public expenditure that goes on in the European Community. That is the budget that we are talking about in such apocalyptic terms. It is not possible to contemplate doing what paragraph 11 suggests.
If the right hon. Member for Worthing is interested in reality and in achieving a constructive approach to a difficult and serious problem—and I think the Minister would agree—he should not be involved in making the sort of statements that are contained in paragraph 15 of the report which says:
These escape clauses,
—presumably those are the aberrant circumstances that I mentioned earlier:


together with the fact that Budgetary Discipline is subject to political and not judical interpretation, render the Agreement vulnerable to the vagaries of the qualified-majority procedure.
After 7 o'clock we will debate the Single European Act, which is about improving and extending the qualified majority procedure. If we want out of the European Community, we must cut out the whole thing, but if we wish to continue as members of the EEC we must face the reality, which is that all the other members of the EEC are agreed that there should be a slow build-up of qualified majority voting in the Council of Ministers. Paragraph 18 says:
Should an unacceptable proposal be made in the Council, one contrary vote would be enough to stop it in mid-career. A further weapon will be available to help defend the embattled veto.
If the business is to defend the embattled veto, and if that is the concept of the right hon. Member for Worthing of the way in which decision-making in the Community in future is to proceed, I have to say to him that it is not my concept.

Mr. Higgins: It would be helpful to the House and to people outside to be clear about the position of the Liberal party on majority voting on the provision of financial resources. Quite clearly, if we do not have a continuing right of veto in that area, then by a majority vote the other members of the Community could impose taxation on our constituents whether this Parliament wanted it or not. If that is the position of the Liberal party on financial issues, leaving on one side majority voting on other issues, the House and the electorate at the next general election will be interested to hear about it.

Sir Russell Johnston: With great respect, I say again to the right hon. Member for Worthing that he must distinguish between theory and reality. So far in the Council of Financial Ministers we have not seen the exercise of a veto. I think that is right and I said that in an intervention, but perhaps the Minister would confirm it. Throughout, decisions agreeable to everybody were reached through compromise. No veto has formally been cast. The right hon. Member for Worthing may say that there was a possibility that the veto could be cast, and that that was an influence on the subsequent debate or discussion. That may be so, but my next point is also a matter of reality. In the words of the right hon. Member for Old Bexley and Sidcup (Mr. Heath), the former Prime Minister, or, as somebody said the other night, Old Bexley and Old Sidcup, if any member state of the European Community finds itself in an impossible situation, some solution will have to be found. That is reality, that is politics. The right hon. Gentleman seems to be asking me to make some sort of formalised statement, but things do not work that way. They work in a political fashion through negotiation, compromise, bargaining and by what unkind people would describe as haggling.

Mr. Higgins: I am interested in the hon. Member's response to my intervention. Does he think that the House should have a veto about the financial allocation of resources to the Community?

Sir Russell Johnston: The financial allocation of resources within the Community?

Mr. Higgins: To the Community.

Sir Russell Johnston: We do have that veto. We have already agreed to the 1·4 per cent. ceiling which cannot be increased unless the Government bring forward a request to the House and that request is passed. I accept that fact. We are the suppliers of the money, but that is not what we are talking about in this case.
I should like to say why I shall not recommend to my hon. Friends that we support the amendment. Instead, I shall recommend that we support the Government motion. In any event, there is an existing agreement under which it is possible for the Commission to ask for these payments a month in advance. I am subject to correction on that, but the right hon. Member for Worthing is in a corrective frame of mind and no doubt he will correct me if I am wrong. That existing agreement was part of the package settlement that included the British rebate. That is how I understand the position. As far as I know — and the Minister will correct me if I am wrong—we are already committed to doing it. The money is there already and it is not a matter of getting new money.

Mr. Budgen: 1·6 per cent.

Sir Russell Johnston: It has nothing to do with 1·6 per cent. The hon. Member for Wolverhampton, South-West is sitting like a pixie muttering 1·6 per cent. We are not discussing 1·6 per cent., nor are we discussing 1·4 per cent. We are discussing the fact that the Government have brought forward a request to fulfil an agreement they have already made with the European Community during the negotiations which produced the British rebate.
Secondly, the money is already available. We collect own resources — the agricultural levy and Customs duties—two months before we hand them over. It is a matter of handing over existing money that is lying in the vaults and not of finding new money.

Mr. Teddy Taylor: Does the hon. Gentleman accept that article 10(2) of the treaty of Rome is precise when it states that the Commission has the right to ask for additional payments in advance and that Governments can say no? Surely he will accept that that basic point is set out and cast clear in the treaty.

Sir Russell Johnston: Governments, like ladies, can always say no. I do not deny that. I am saying that this Government, and this lady, have already given a forward sign that they would say yes, and they cannot really change their minds in mid-course.

Mr. Ian Stewart: I intended to contain myself and to reply to all the issues raised at the end of the debate. As a factual dispute appears to be developing, perhaps I should explain that article 10(2), to which my hon. Friend the Member for Southend, East (Mr. Taylor) has referred, is in the 1977 regulations. It empowers the Commission to invite member states to make contributions a few weeks earlier than they would otherwise do, but it does not oblige them to do so. Nothing in the Fontainebleau agreement referred to that power or changed it.

Sir Russell Johnston: I stand corrected. I apologise for not being entirely accurate. That, however, does not deflect me from my view of what we should do.
Those who have contributed to the debate — for example, the right hon. Members for Worthing and for Taunton (Sir E. du Cann) and the hon. Member for Hamilton — have tended to use rather apocalyptic language. They have spoken of deep concern and have said


that we are discussing a matter of profound importance. They have used words such as "astounding", "incredible", "unbelievable" and "insulting". One of the realities is that the green Benches in the Chamber are fairly empty. If the issue before us were really appalling, astounding and dreadful—

Mrs. Elaine Kellett-Bowman: The hon. Gentleman should speak for himself. No SDP Members are present.

Sir Russell Johnston: I am not excluding SDP Members. It is evident that there are bare green Benches on both sides of the House. If the matter were of such apocalyptic importance as has been described, the House would be black with bustle.

Mr. John Townend: I rise as a member of the Select Committee on the Treasury and Civil Service to support the amendment of my right hon. Friend the Member for Worthing (Mr. Higgins). He made an outstanding speech and his arguments were unanswerable.
I found the speech of the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) most illuminating. Perhaps the absence of his colleagues is due to the fact that they do not agree with the views that he has advanced. The hon. Gentleman has criticised a number of paragraphs of the Select Committee's report, and the press and the public might be interested to know that it was a unanimous report which was supported by the hon. Member for Colne Valley (Mr. Wainwright), who is a Liberal Member. What is even more interesting is that the hon. Member for Colne Valley has signed the amendment of my right hon. Friend the Member for Worthing. It is clear that even on this rather technical issue there is disagreement not only between the Liberal party and the SDP but also between Liberal Members.
Despite the fact that the hon. Member for Inverness, Nairn and Lochaber was pressed by my right hon. Friend the Member for Worthing, the hon. Gentleman implied that an alliance Government would not be prepared to use the veto to prevent an increase in VAT own resources. Indeed, the hon. Gentleman said that he supported increasing the own resources of the Community. The alliance should make it clear to the British people that it feels that the Community can spend their money rather better than the Government, which is controlled by the House. I find that unacceptable, and I am sure that the British people do. If we are to help the depressed areas, it is far better to do so under the control of the Government than by increasing finance to the EEC social fund.
To bring these proposals before the House must make this a sad day for the Government. The bringing forward of payments by one month does not seem a matter of great importance on the face of it, but I suggest that we are being presented with the tip of the iceberg. Indeed, the Supplementary Estimates warn that other requests for advance payments are expected to be made. This is not merely a cash flow problem; we are faced with a major financial problem. Despite repeated promises that there would be adequate budgetary discipline and control, the Community's finances are in a state of chaos and the Community faces a major financial crisis. The discipline agreement that was negotiated at Fontainebleau has turned out to be worthless. Many of us who voted against

increasing own resources to 1·4 per cent. thought that this would be the result, and it gives me no pleasure to say that tonight.
The current financial crisis must be set against the background of an enormous increase in the resources of the Community, which was provided by a 40 per cent. increase in VAT contributions. My right hon. Friend the Member for Taunton (Sir E. du Cann) has said that the agreement was reached subject to three assurances, which were that the cash would last for at least several years, that strict budgetary control would operate and that the rate of increase in farm spending would be curbed. We are only six months through the first year and we are running out of money already. Farm spending is clearly out of control and there has been no budgetary discipline. This must come as a great shock and disappointment to the Government.
It is clear from Hansard quotations made earlier in the debate that at the time when my hon. Friend the Member for Eastbourne (Mr. Gow) was at the Treasury the Government expected that they would not have to return to the House in this way. Many of my right hon. and hon. Friends feel—I am sure that the Government do as well — that the EEC should follow a policy of resources determining expenditure rather than expenditure determining income. It must adopt that policy because there is a ceiling on VAT contributions. This has not happened despite all the negotiations and understanding on budgetary control which were explicit in the Fontainebleau agreement.
It is clear that time and time again the Community undertakes commitments for future years which it must appreciate it will not be able to meet because of lack of resources. It then resorts to financial manipulation, intergovernmental agreements and delays in payments, and now the bringing forward of contributions. If public companies ran their finances like the EEC has run its, they would be brought before the courts and the directors would end up in gaol. Even at this moment negotiations are taking place between the European Parliament, which wants to increase expenditure to the very limit of the 1·4 per cent. ceiling, and the Council of Ministers. I understand that the Council has already compromised and is suggesting that the budget could be increased. As spending on agriculture is open-ended, it is clear that the 1·4 per cent. threshold will be reached quickly.
There are good grounds for thinking that this is part of a sustained policy. It could be described as a plot by the bureaucrats and Euro-fanatics to put pressure on member Governments, especially the Government of the United Kingdom, to agree to a further increase in the VAT ceiling. That is unacceptable to many Conservative Members. We do not want to see European expenditure rising inexorably year after year when it is part of our policy to gain greater control of public spending, so that we can fulfil our commitment to reduce taxation, especially on the low paid.
The EEC now needs to cut its coat according to its cloth. The hon. Member for Inverness, Nairn and Lochaber talked about the change in the value of the dollar and the ecu, which is exactly the case where it should take effect. The United Kingdom has had to face an enormous fall in oil revenues, but, because of the ability and financial rectitude of my right hon. Friend the Chancellor of the Exchequer, we have absorbed it. The


EEC should have the same financial rectitude. I suggest that the Government accept the final paragraph of the Select Committee report, which states:
We therefore recommend that the Government should make clear its intention of using its veto against any proposal to raise VAT ceiling, of declining to support any further substitutes in the form of Inter Governmental Agreements.
As a shot across the bows of the EEC, the Government should accept the amendment tabled by my right hon. Friend the Member for Worthing.

Mr. Eric Deakins: I apologise to the right hon. Member for Worthing (Mr. Higgins) and to my Front Bench for not having been present for the opening speeches. As I am an ardent advocate of certain views on the Common Market, the House will take it from me that I would have been present if it had been humanly possible. I shall be present for the rest of the evening and possibly until the small hours of the morning.
I agree with my hon. Friend the Member for Hamilton (Mr. Robertson) and the hon. Member for Bridlington (Mr. Townend) that the Government's response to the Select Committee's report was unworthy of them. I echo the words of the right hon. Member for Taunton (Sir E. du Cann) that it is an insult to the House to give such a pathetic answer to a well worked out report on matters which affect the House and the country. It is not a party political matter and it would be wrong for us to treat it in that way. That is why I have found some of the comments in the debate a little disappointing.
We are the guardians of the public purse, regardless of what our views are about particular items of expenditure or about the policies behind that expenditure. When, some considerable time ago, we debated the agreement I thought that it was bad, although I did not say so in the House. I said, "Let us give events, member states and the Commission a chance to show those of us who are sceptical, if not cynical, about the procedure that we are wrong." My attitude could be summarised as, "Give them enough rope and they will hang themselves."
During the past year the EEC has had enough rope on the operation of the budgetary discipline procedure for all of us, other than the most dedicated, fanatical supporters of what the Common Market does, whether right or wrong —there are a few of them in the House—to realise that the budgetary discipline procedure has not worked and will not work. There is no conceivable way in which it could work. We made that point at the time of the budgetary discipline agreement.
It is not a legal agreement and, when challenged at the time, the Prime Minister said that she might well have liked to make it a legal agreement but that other member states did not want that. One can well understand that because member states were going through a charade to obtain, as part of a bargaining package, our agreement to the increase to the 1·4 per cent. VAT ceiling, which the British Government would not have accepted had they not been able to assure the House that they had a workable agreement on budget discipline.

Sir Russell Johnston: The same theme is coming into the hon. Gentleman's speech as came into the speech of the hon. Member for Bridlington (Mr. Townend), which is

that somehow only the British are capable of financial rectitude, and that the Germans and Dutch are wholly incapable of any such thing. That is nonsense.

Mr. Deakins: I am not denying that some other member states are capable of financial rectitude. My point is that the majority of member states, although capable of it, have no intention of achieving the degree of financial rectitude on which our history and Parliament have been based.

Mr. John Townen: Is it not the case that, although member states may have the ability or the desire for financial rectitude, in most cases financial rectitude is not in their interests because the major contributors are still the British and German Governments? Although the French Government are becoming a contributor, they are a relatively small one. The vast majority of member states have a vested interest in increasing the size of the budget because they will receive a larger amount.

Mr. Deakins: I am not sure that I would go along with all that the hon. Gentleman said, but I shall develop the point later.
One of the troubles with the guidelines on the budgetary discipline agreement is that they have set a rate of increase for agricultural expenditure. In a written answer the Economic Secretary said:
The guideline for agricultural expenditure states that its rate of increase must be less than the rate of growth of the own resources base."—[Official Report, 20 December 1984; Vol. 70, c. 327.]
That presupposes that there will always be an increase. Nothing was said about a decrease, and I invite the Minister to comment on that. Indeed, the whole trend in Community expenditure, especially on the common agricultural policy, has been upwards. We cannot rely on the guidelines, budgetary discipline and the financial reference framework to set an arrangement in which in any one year expenditure is reduced below the outturn or below that budgeted in the previous year. I challenge the Minister to tell me that I am wrong.
When I asked about the financial guidelines for agricultural expenditure and about how overspending in one year may somehow be got back the following year, the Minister said:
Article 5 of the budgetary discipline agreement states that in clawing back additional agricultural expenditure the Council shall concentrate its activity primarily on the production sectors responsible for the failure to adhere to the guideline. Price reductions would be one means of securing the necessary savings."—[Official Report, 30 January 1985; Vol. 72, c. 219.]
Is it conceivable that in any one year Agriculture and Finance Ministers, meeting either separately or, finally, jointly, would agree to reduce agriculture prices below what would otherwise have been agreed simply to cut the overspending in the previous year? One can conceive of that in our financial terms and we have done that in previous years, but one cannot conceive of it in European Community terms. Therefore, that answer does not provide a safeguard.
Hon. Members have pointed out that the VAT ceiling of 1·4 per cent. will be reached soon. That is because CAP costs are continuing to rise. Hon. Members on all sides of the House must accept—one day I hope to persuade my Front Bench of this—that no fundamental reform of the CAP is possible. There is no point in my right hon. and hon. Friends or right hon. and hon. Gentlemen either now or in future saying, "We shall reform radically the CAP to


reduce the amount of expenditure." That has been tried by Governments of all parties in the past decade and without exception they have all signally failed.
CAP expenditure—I challenge the Minister to prove me wrong—has increased every year since Britain joined the EEC. It has increased and decreased as a percentage of the total budget, but expenditure has increased inexorably. It is partly because of the vested interests in it — the member Governments and the farming vote, which tends to get more powerful as its size is reduced. We have seen that in the United Kingdom, but I do not understand why it is. It is also getting more powerful with the increasing Mediterranean influence in the Community with more and more southern European states coming in who will depend much more on the guidance and guarantee fund for changes in agricultural structures. I am not objecting to them wanting those things but they all involve more expenditure than is the case at the present.
There is a certain amount of false optimism around. There is a feeling that if we could only get the common agricultural policy under control we would then have resolved, or at least gone a long way to resolving, the problem of total EEC spending. I hate to disagree with many right hon. and hon. Gentlemen from both sides of the House, but I must point out that they are making an assumption which is unwarranted. The assumption is that if we can reduce CAP expenditure we shall, since it is about three quarters of the Community budget, reduce total EEC expenditure. If ever we succeed in reducing CAP expenditure, the pressures to spend on the social fund and the regional fund the money that is saved will increase proportionately and total expenditure will go on rising even though the balance between the CAP and the other structural funds will be rather different from in the past.
There is also the constant pressure from the Assembly to increase spending. If anybody doubts my word let him read the debate, which I have available, of Assembly proceedings on 10 December 1985 when it was querying the Budget approved by the Council. The Assembly rejected that budget and passed its own illegal budget. Every speech made by Assembly Members from all over Europe of all different political parties, from extreme Left to extreme Right, was on the same theme. They said that the Community needed to spend more money than the Council was willing to allow in its own budget—which is why the budget was rejected—partly because of the increasing costs of the common agricultural policy and partly because of the wonderful phrase "the cost of the past". That phrase is simply a euphemism for the fact that up to now there has been no mechanism in the Community for bringing expenditure commitments into balance with anticipated income resources, such as we have in this country.
As we all know, the Community has to have a balanced budget each year. It cannot borrow money but in the past it has entered into more and more commitments, which have been agreed by national Governments as well as by members of the European Assembly. Those commitments have increased over the years and have had to be taken into account increasingly in the following year's budgets and there has not been the income to meet those commitments.
We are now being told by the Assembly that if we give a big slice of money in one year to the Community to resolve all the costs of the past we could get back on an even keel. I beg to differ. We shall not get back on to an

even keel until we have in the EEC budgetary discipline and proper financial procedures such as we have in the House of Commons. I believe that as long as there is the device of intergovernmental agreements to let the Community off the hook when it spends more money than is available, and the device of raising the VAT ceiling every two or three years, we shall never get Community spending under control.
The Government and some civil servants believe that this is the sort of debate that can be ignored and swept to one side. They believe it involves just a few rebellious Conservative Members, a few people on the Labour Benches and the alliance backing the Government. I believe that this is the sort of debate and vote that we will increasingly have in the House, under any conceivable Government. Those who believe that the Community can get whatever it asks for from this country without proper financial procedures and discipline will be making a very big mistake. Eventually, when the British people wake up to what is not being done in their name—the House is not exercising proper financial control over what goes on in the EEC as regards Britain's contribution—they will turn to their politicians and say, "Enough is enough".
I believe that the House ought to give a message to the British people, even if we lose the vote tonight, to say that we are not prepared to go on being treated, basically as the Treasury and Civil Service Select Committee has keen by the Government, as children who do not really know what we are talking about. The Government feel that, in any case, it is not really important and that there are wider political implications. There are no wider political implications than financial considerations. The House was built up over the centuries on the basis of financial control. If we lose financial control, I believe that we are well on the way to losing democratic control as well.

Mr. Eric Cockeram: All those who have taken part in this debate, from whatever side of the House, fall into one of two groups. One group, for shorthand terms, is sometimes referred to as the anti-EEC brigade and the other group is in favour of the Common Market. It is interesting that there has been virtual unanimity from speakers on both sides of the House, to whichever of the groups they belong, that the EEC is failing to control its expenditure. That is the subject of this debate. It is not about whether we are for or against the Common Market but about whether we are for or against financial control.
When the House voted to join the Common Market in 1972, I was one of those who enthusiastically voted to join. I thought that I was voting in favour of European cooperation on defence, research and development — the European airbus is an obvious example—harmonisation of customs duties, increased Community trade and a sensible co-ordinated agricultural policy. I stand by all those things. However, I did not vote, have never voted and will never vote for the lack of financial control which is being shown by those in control of our taxpayers' money in Brussels and Strasbourg.
Nine hundred and thirty million pounds is one heck of a sum of money. It is only some 18 months since the House agreed a 40 per cent. increase in own resources for the Common Market when the VAT duties payable to the Common Market went up from 1 per cent. to 1·4 per cent. We were promised at that time that a new system of strict


budgetary control would be instituted. That was to start in the current calendar year, six months ago. Here we are, six months into the new regime of strict budgetary control, and the House, despite assurances from the Treasury Bench in earlier times, is now faced wih a further demand for an extra £930 million. Commissioner Christophersen, Vice-President of the Commission, admitted in a recent article that the 1·4 per cent. of own resources is already inadequate.
About 70 per cent. of EEC expenditure is spent on the common agricultural policy and over half of that is spent on the storage and disposal of surplus food. In the grain sector, much of that is unfit for human consumption. However, we are being asked to pay for the storage and disposal of it. It would be cheaper to burn it in the fields, since some of it is not fit for human consumption, than store it and then sell it at knockdown prices—beef at 15p a pound and butter at 10p a pound—to people such as the Russians and the Libyans, which is what has been happening. We are spending £150 million a week on storage and disposal of the surpluses. That is the kind of sum that the House is being asked to approve. I cannot approve of that expenditure, nor can my constituents, when at the same time we have very strict cash controls of important expenditure in this country, such as in the National Health Service. Even my local authority is not being permitted to spend its own capital receipts, yet we are being asked to pass this sum for the EEC when, manifestly, there is a lack of financial control.
Anyone who wants the facts can refer to a recent Public Accounts Committee report. The hon. Member for Walthamstow (Mr. Deakins) and I are both members of that Committee. The Committee examined the cost of storing and disposing of the surplus. It is a revealing report. I do not intend to go through it. But no one could approve of that form of expenditure. No one could come to the House, representing his constituents and taxpayers generally, and approve of the continuous and increasing financing of such expenditure. It is one of the fundamental principles of this ancient House that Back Benchers come to represent not merely their own constituents but constituents at large, to exercise control over supply—that is, the expenditure of money by the Executive. I suggest to the House that we are not fulfilling that function if we pass this expenditure. I, for one, cannot do so.

Mr.Teddy Taylor: Most of the points that I should like to make have been made in the superb speeches from Conservative Benches, particularly by my hon. Friend the Member for Bridlington (Mr. Townend) and my right hon. Friend the Member for Taunton (Sir E. du Cann). Therefore, I should like to make just two basic points.
I hope that in his reply the Economic Secretary will give us some explanation of why he and the other Ministers, in view of all the assurances that were given to the House and all the pledges, agreed to such massive extra expenditure at the meeting of the Council of Finance Ministers on Monday. I can recall hearing cheers on 11 March this year when, at Question Time, our Prime Minister said that she was going to fight very hard against the supplementary estimate put forward by the Commission of £1 billion, but, as we know, on Monday the Minister and his colleagues

agreed within a few hours to a revised supplementary budget that was much more than that figure. We also received the assurance that agricultural spending would be contained, but we know from all the reports that most of the extra cash will be spent simply on dumping surplus agricultural produce on the world markets.
The Minister also gave the clearest of assurances that, if there were overspending, it would be clawed back. In fact, the present Secretary of State for Scotland said on 11 December 1984:
Within the conclusions that have been adopted, although exceptional circumstances may result in increased expenditure, the provisions also require that that additional expenditure should be clawed back in the following years. Therefore, the overall requirement to control expenditure is safeguarded.
The Minister must tell us why the strict budgetary controls have been abandoned and have broken down. Why is agricultural spending totally out of control? Is it still the case, as said by Ministers in December last year, that the extra spending will be clawed back? I am sure that it will not. I am sure that it cannot be. I believe that either Britain was wholly misled in the meetings of the EEC, or else the House was wholly misled.
I hope that the Economic Secretary in particular will look back on the debate of 11 December 1984, when he responded angrily, which was out of character, when I suggested that the strict budgetary controls might be a worthless piece of paper. He said:
I take the strongest possible issue with my hon. Friend over that view. We undertook to arrange that measures necessary to guarantee the effective application of budgetary discipline would be put in place. The component parts of those measures are an overall reference framework covering all expenditure, separate provisions for an agricultural guideline and a maximum rate of expenditure covering non-obligatory expenditure." — [Official Report, 11 December 1984; Vol. 69, c. 951–999.]
We were told that that would be not just a recommendation, but binding on the Council. Of course, Ministers say things from time to time. Sometimes they can laugh them off and say that things have changed. But the Minister must remember that, if the House has any influence on controlling spending, that assurance was given to persuade all of us to give 40 per cent. more on VAT, which is the equivalent of a 25 per cent. rise in real terms in the total spending of the Common Market. Conservative Members, and I am sure Liberal and Social Democratic party Members, went round the country saying, "We know that we shall give a lot more money to the Common Market, but don't worry because it is under control. We have budgetary controls that are legally binding." Therefore, we must have an explanation from the Minister not only of what went wrong but of why on Monday he agreed to the huge additional sum, taking us right up to the control that we were told would last for several years, without the fight that the Prime Minister promised us.
Secondly, we know the excuses that will be trotted out. We always hear them in advance from the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). Then we usually hear them about a month later from members of the Government. First, we are told that the reason is that the dollar has been falling, and if the dollar falls food prices are bound to go down, too. What absolute reckless economic nonsense. For example, if sterling goes down in value, we are told that it costs us more to buy things from abroad because they cost more. It is normal,


natural economics. Somehow the Common Market is trying to get across a crazy economic fallacy that the only thing to which normal disciplines do not apply is agriculture: if the dollar goes down in value, the price of all foodstuffs will adjust themselves automatically and go down. If the Minister tries to trot out that excuse— I hope that he will not—and if the hon. Member for Inverness, Nairn and Lochaber thinks of doing so again, let them look at what has been happening to other food prices that are not covered by the Common Market. Have they been going down with the dollar?
Let us look at the figures in the monthly commodity price bulletin issued by the United Nations Organisation. For example, when the dollar has been plunging in the past 12 months, the price of coffee has gone up from 1·44 cents to 2·44 cents a pound. Why has the price gone up? Simply because there is a shortage of coffee. The price of tea has gone down from 1·76p to 1·34p because, whereas there was a shortage last year, there is now a glut of tea. What has happened to bananas? We are going fast towards creating a banana republic in the Common Market. The price of bananas has gone up from 21p to 29p over the past year. What about our old friend pepper? The price has gone up from 846 cents to 1,203 cents per kilo.
I am only trying to show the Minister—I hope that he will accept it—that prices of food do not go up or down depending on the rate of the dollar. They go up or down depending on whether there is an excess of supply or demand. We all know why Common Market food prices have been going down. It is because there is a horrendous glut, which we are making worse. What is so criminal about it, and what no one seems to care about, apart from those who attend these debates, is what it is doing to the Third world. Misery, starvation and deprivation are being created through the dumping of all that food on the world markets, which are being depressed. That is causing devastation to the Third world and real poverty.
Is the currency level the reason? No, it is not. My hon. Friend the Minister knows that it is not. Everyone in the House, including, I am sure, the hon. Member for Inverness, Nairn and Lochaber, knows that it is a bogus piece of nonsense to say that if currency goes down, food prices go down by the same or a similar amount. The reason why they go down is that there is a surplus of supply.
The second excuse that is trotted out is that we did not make provision for Spain and Portugal joining the Common Market. The Minister must know that that is not so. On 14 November 1985 the then Minister of State, Treasury made it abundantly clear that full provision had been made not only for the admission of Spain and Portugal but for refunds of own resources under the transitional arrangements. That had been fully covered, according to the Government. We can assume only that the Government were telling us the truth.
We must pay the money because of the budget rebate. Britain will not get its money unless we pay the extra cash. The Government must answer why the present Minister of State, in answer to a parliamentary question on 3 July 1986, said that there was full provision and that the EEC was obliged to allow us to deduct the money. As has been said by many Conservative Members, sadly and tragically Common Market spending is wholly out of control. There is no justification for the interest-free loan of £900 million.
We heard today that two wards in a hospital in Southend will continue to be closed for a further six months. We need £800,000 to keep those wards open. This morning, I received a telephone call that the Sacred Heart primary school's heating is not working. It will cost a lot of money to repair it, and the money is not available. All hon. Members could tell similar stories and could draw attention to local problems. Ministers must ask themselves how they can go back to their constituencies and say that we cannot afford to spend modest sums of money when the Common Market spends £150 million every week on dumping, destroying and storing food. The Common Market is asking for an extra interest-free loan of £900 million from the Government without any pledge that things will get better.

Mr. John Watts: I joined the Treasury and Civil Service Select Committee halfway through the inquiry. I approached the question with a mind unclouded by any excessive knowledge of the subject. I listened to the evidence presented to us with growing incredulity. Despite the honeyed words of the Treasury officials and the persuasive tones of my hon. Friend the Minister of State, Treasury, I formed a clear impression that the emperor had no clothes. When I asked, in my perhaps naive way:
on the basis of the evidence of actions, which Member States and which parties to these financial arrangements now appear to have commitment to budget discipline at all?",
I was told:
the point to have in mind is that no Member State has repudiated the Budget Discipline conclusions. They all stand. They have not been superseded by anything else".
That was the strongest answer that could be given to me. I have no doubt about the commitment of my right hon. Friend the Prime Minister or the Government to achieving effective budgetary discipline. However, as our report shows, the stark fact is that no other member state shares that commitment. For example, only five of the 12 member states would join us in taking action in the European Court of Justice against what has been shown to be an illegal budget. The verdict in that case was a great victory. Although the establishment of the principle is of intrinsic value and importance, the benefit will be dissipated if the House approves the motion.
I am no anti-Marketeer or Europhobe. It is precisely because I wish to see the European Community succeed, and because the health of the Community requires that budgetary discipline should be imposed, that I believe it is necessary for the House to signal that there is at least one sovereign Parliament among the member states that will not continue to supply limitless funds to an organization suffering from financial incontinence. We should not be seduced by the argument that no more than advance payment is at stake.
If I found it difficult to manage my own financial affairs, would it be any solution for me to try to persuade the Fees Office that it should pay me my August salary on 31 July, my September salary on 5 August, and continue to advance the payments of salary to me to fund my cash deficiency? Where would it end? It would not be long before it would be necessary for our total contribution for the financial year to be paid to the Commission by the end of June, and for advance payments on account of the contributions for the following year to be paid from July onwards. So it continues.
As the insatiable appetite for money grows, as more and more is provided in a never-ending attempt to satisfy that appetite, so the European Community's financial obesity will grow, until it collapses under the burden of its own weight.
Successive expedients to bail out the Community from the consequences of its lack of budgetary discipline provide no solution to the problems of a spendaholic. The time will come—I echo the words of the hon. Member for Walthamstow (Mr. Deakins)—when we must say, loudly and clearly, "Enough is enough." In my view, that time has come. That is why I shall support the amendment tabled by my right hon. Friend the Member for Worthing (Mr. Higgins).

Dr. Oonagh McDonald: Hon. Members on both sides of the House have, quite rightly, condemned the lack of budgetary discipline exercised by the European Community. They have referred to the wasteful spending on agriculture, and especially intervention stocks. Hon. Members have referred to the Public Accounts Committee's report. I recommend the report fo the House. It spells out what we have all long suspected and described as the case, that far too much is wasted and that food is kept in stores for too long. It is an utter disgrace, in a time of world food shortages, for that to happen.
I do not intend to detain the House for long, because it is vitally important that the Economic Secretary to the Treasury answers the debate. It seemed to me that he did not understand and appreciate the points of order that were made at the beginning of the debate—that advance payments to the European Commission were absurd when we have no notion of how much the budget will be, what its component elements are, and whether or not the 1·4 per cent. ceiling will be over-run this year, never mind in the next financial year.
It is quite wrong that such a debate should take place today before the European Parliament votes on the budget. That was true at the beginning of the debate. However, during the debate, at 5 o'clock, I looked at the Press Association tapes to see what had happened. I discovered that the European Parliament had voted for a budget which I presume is the same budget as was agreed by the Council of Ministers. The fact that the Minister did not interrupt the proceedings, and the fact that no statement was made—it appears that no statement will be made, certainly not today — about what is in the budget show an utter contempt for the House on the part of the Government.
According to the Press Association tapes, agricultural spending has been increased by a further £700 million. It still represents at least two thirds of the total budget. After all that has been said about efforts to control farm spending, we find that this year farm spending has been increased. The Minister should have ensured that we were told that before the debate took place. That such a debate takes place without anything being said formally by the Government about the contents of this year's European budget shows arrogance and a contempt for the proceedings of the House.
It appears that the amount spent on the regional and social funds has been increased by 6 per cent. and 7 per cent. respectively. We do not know what such an increase

means. My hon. Friend the Member for Walthamstow (Mr. Deakins) referred to the euphemism of past commitments. That is, quite simply, unpaid bills—bills that have been incurred by national Governments and are to be reimbursed by the European Community for regional and social spending, the kind of spending of which Labour Members entirely approve. Although it appears from the tapes that there is an increase in this spending, we do not know what it is for. Is it intended to fund new projects, designed to reduce the horrendous unemployment levels, or is it just intended to pay off debts incurred in the past years? The president of the Court of Auditors tells us that, at the end of 1984, more than £9 billion of such debts were outstanding, covering, to a large extent, past payments for the regional and social funds.
We do not know whether this year's European budget allows an increase in the regional and social funds merely to settle some of the unpaid bills. We have no idea, because the Government have not seen fit to tell us what they must have known before the debate. After all, telephone and other communications with Brussels exist and a Finance Minister was there during the night coming to an agreement on the budget's contents. Why was no statement made?
It appears that the Minister of State is proud of the settlement. According to the tapes, he says that "chaos" in the Community has been "averted" and that Britain is getting the credit. I am sure that the Minister of State will be eating those words in a few months' time. Of course chaos in Community spending will not have been averted. Apparently, the budget is right up at the 1·4 per cent. limit.
We do not know what this year's cereal crop will be. There may be estimates but the harvest has not yet been gathered in. We do not know what the intervention prices will be, how much cereal will have to be stored and how expensive that will be. Fluctuations in the dollar have already been well described by the hon. Member for Southend, East (Mr. Taylor). This is one of the gaping holes in the so-called "budgetary discipline". Fluctuations in the dollar are used as excuses for increasing spending through the budget. Such fluctuations may well occur during the rest of this year.

Mr. Deakins: I thank my hon. Friend for giving way. I know that she is pressed for time and that the Economic Secretary wishes to reply. Were the increases of 6 per cent. and 7 per cent., which were mentioned on the tapes, increases over the 1986 budget approved by the Council in December 1985 or increases over the 1985 budget as approved last year by the Council and the Assembly?

Dr. McDonald: My hon. Friend was right to make that point. As he well knows, that detail is not spelt out in the account we have been given. We have to rely on a statement from the Government for that, and it appears that no such statement is forthcoming. We believe, from rumour, that the Government would much prefer to hide behind a written statement made late on Friday afternoon and to hope that everyone has forgotten the whole thing by Monday morning. That will not happen. We shall press for a proper statement to be made tomorrow and we expect to hear tonight from the Economic Secretary more details of the budget.
I want the Economic Secretary to reply extensively to the debate, so I shall make only one more point. A further press report suggested that overseas aid had been cut by


£40 million. In an effort to spend more on expensively produced and often wasted food in this Community, we are prepared to cut aid to the Third world. A British Minister was in Brussels engaged on that matter on the very day The Guardian reported that the Prime Minister opposed sanctions against South Africa. It reported the right hon. Lady as saying:
I find nothing moral about them, sitting in comfortable circumstances, with good salaries, inflation-proof pensions, good jobs, saying that we … will put x hundred thousand black people out of work, knowing that this could lead to starvation".
Frankly, such a description could well apply to those who decided on that very day to cut the overseas aid budget by another £40 million. That action showed the charade of the Prime Minister's words.
We want the Economic Secretary to tell us the truth about the budget, which has apparently been agreed. We should like a firm assurance that the 1·4 per cent. ceiling will not be exceeded this year and that neither he nor his right hon. and hon. Friends on the Treasury Bench will have the cheek to ask us for more money to be squandered this year in Europe.

The Economic Secretary to the Treasury (Mr. Ian Stewart): I must confess that it would have been convenient for me, as well as for other hon. Members, if my hon. Friend the Minister of State, who has been attending these meetings, had been able to get back sooner. I might then not have had to deal with this debate.
I did not speak at the beginning of the debate because I felt that it was right that it should be introduced by my right hon. Friend the Member for Worthing (Mr. Higgins) as Chairman of the Select Commit tee on Treasury and Civil Service. I pay tribute to him and the members of his Committee and to my hon. Friend the Member for Ludlow (Mr. Cockeram) and the other members of the Select Committee on Public Accounts for their vigilance and for the way in which they express, through their reports and debates on statements of this kind, their concerns about the financial matters for which Ministers are responsible, especially the European Community. The Community's financial affairs are always of keen interest to the House.
It is a year since I was responsible for these matters but I note without surprise that the concern has not diminished in any way. I should like to respond to the points made by the hon. Member for Thurrock (Dr. McDonald) and made in points of order before the debate about the relationship of the 1986 budget to the Estimates.
It would be impossible and impractical for me to respond to hon. Members on the details of a budget whose process is due to be completed today at a meeting at which my hon. Friend the Minister of State represents the United Kingdom. I shall certainly convey to him the wishes of right hon. and hon. Members to hear about these measures, especially their details. So far as I know, my hon. Friend has not yet returned to the United Kingdom.
The debate is about the earlier payment, not of VAT own resources, but of levies and duties which are collected by all member states each month and which are normally payable to the Commission after about seven weeks—on the 20th clay of the second month following the month to which they relate. The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) referred to a procedure which, as I pointed out in an intervention, is based on

article 10(2) of the 1977 regulations—my hon. Friend the Member for Southend, East (Mr. Taylor) correctly made that point — which imposes no obligation on member states to meet those requests for early payment. These early payments therefore cannot be paid—and it would not be proper for them to be paid․directly out of the Consolidated Fund. That is why today's procedure is adopted.
The Consolidated Fund is required to defray charges which may be made in the interim out of the contingencies fund. The sum of £930 million on the Order Paper and contained in the Estimates is not an aggregate sum. It is simply the amount of £130 million a month multiplied by the number of months for which it is brought forward. It is not, therefore, a loan. Several of my hon. Friends refer to this sum as a loan for the period. It is not; it is the equivalent of bringing forward the normal monthly figure of some £130 million of levies and duties for several months. That is why provision is taken to reimburse the contingencies fund for the payments already made and to enable provision to be made in the coming months if it is necessary to make payments out of the Consolidated Fund under the authority of the Estimates. If we did not have that, it would not be possible to do that when Parliament is not sitting.
There is no certainty that these sums will be required or that they will even be invited. I have been asked to comment on this point. When the Government receive a request for such funds they consider the request carefully. Such a request was received in March this year and after careful consideration we were not satisfied that the Community needed the funds. We reported that hack to the Commission and as a result the request was withdrawn.
This is not an automatic procedure. In recent years this procedure has been followed frequently because of the cash flow problems of the Community. I do not wish to disguise that fact in any way. There have been 21 occasions in the past three years when that has happened.
I would like to repeat the point that I made before this debate began.

Mr. Budgen: Will my hon. Friend explain these cash flow problems?

Mr. Stewart: Before the debate began, I said, within the context of the points of order about whether it was proper to debate this matter today, that the use of this procedure of earlier payment of own resources after three weeks instead of seven weeks does not involve any increase in public expenditure. Nor does it involve any extra payment to the European Community because every time the procedure is used or a payment is made, there is automatically a compensating reduction in the liability of the member state to the Community on what otherwise would have been the due date. There is no accumulation and no absolute increase in the amounts of public expenditure.

Mr. Budgen: My hon. Friend is simply explaining the mechanisms. We want to know why this cash flow shortage occurred. What is being done to put it right for the future?

Mr. Stewart: My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) is never too


patient in debates on this subject. If I am given the chance to do so, I will cover the other matters as quickly as possible, including that raised by my hon. Friend.
The cash flow during the current year has been affected by the exchange market. My hon. Friend the Member for Southend, East claimed that the decline of the dollar does not increase the cost of the CAP. It certainly does not increase the cost of the CAP on a one-for-one basis, but a change in the major trading currency of the world does have an effect on food prices and therefore creates a difference between world food prices and the intervention prices of the EEC.

Mr. Teddy Taylor: How does it have an effect?

Mr. Stewart: It has an effect because food prices do not adjust immediately to reflect the change in any one currency. It takes time for the change to work through.
The original budget for this year was constructed on the basis of $1·2 to the ecu. That represented a considerable expected decline in the dollar exchange rate on the rate of $1·35 to the ecu which applied when the budget was first fixed. The dollar has now moved substantially lower and that has meant that there has been a need for further payments under the FEOGA guarantee scheme. That has been incorporated into the budget.
Several hon. Members asked me about budget discipline. Budget discipline is an important reinforcement to the restraints on Community expenditure. The increase due to the dollar change had to be agreed by all Finance Ministers as a special circumstance in this year's ECOFIN. No one has ever made a secret of the fact that such exceptional circumstances could arise. However, the fact that such exceptional circumstances may arise does not invalidate the agricultural guideline. The preliminary draft budget for 1987 has now been drawn up within the financial guideline. That undoubtedly has an effect on price fixing.
I do not claim that price fixing is sufficient to deal with all the problems of the CAP, which have been described so eloquently this evening. I believe, like my hon. Friends,that the CAP is in need of serious measures in terms of future price fixing and the structural arrangements for quotas and levies. Neither of these factors alone would be sufficient to deal with the seriousness of the problem of potential overspending in the CAP.
I was also asked about the implications of the budget for the United Kingdom. I remember occasions a year or so ago when I and some of my hon. Friends who are present today debated whether it would be right to agree to the Fontainebleau agreement. At that time some of my hon. Friends and others were sceptical when I assured them that, even if the 1 per cent. rate ceiling was raised to 1·4 per cent., the United Kingdom figure would still remain well below 1 per cent.—in fact, around 0·7 per cent. The 1986 budget—if it is concluded, as I imagine it will be, at or close to the 1·4 per cent. limit—would result in our contribution for this year being at a VAT rate of 0·68 per cent. That is lower than the figure that I quoted a year or so ago.
In answer to those who asked why my hon. Friend the Minister of State and I were prepared to contemplate a budget of this kind on Monday, I must stress that the illegal budget which the European Parliament passed last December would have involved this country in a VAT rate

of 0·73 per cent. — substantially higher than the consequence of the budget before the Council this week. That justifies the Government's approach to the budgetary problems of 1986 and it bears out what we said to the House a year ago when we dealt with the Fontainebleau arrangements.
I believe that the 1·4 per cent. ceiling exerts an important control and restraint over Community expenditure.

Mr. Deakins: How does it do that?

Mr. Stewart: That has been the case this year. Even before I went to the Budget Council meeting this week, I saw no case for an increase in the 1·4 per cent. ceiling. Having attended the Council meeting, I am fortified in the belief that this represents a very important restraint on the Community's finances. We have no commitment to increase it, and there is no presumption that we would do so. My view, which is shared by many hon. Members, is that the CAP still poses a threat to the finances of the Community and needs to be controlled with all the measures available for that purpose.
I have been asked about the Community's budget for 1986. I have no doubt that my hon. Friend the Minister of State will feel it right to convey to the House—

It being Seven o'clock, MR. SPEAKER, put the Questions necessary to dispose of proceedings on the Estimate, pursuant to the Order [4 July].

Question put, That the amendment be made:—

The House divided: Ayes 175, Noes 253.

Division No. 249]
[7 pm


AYES


Abse, Leo
Crowther, Stan


Adams, Allen (Paisley N)
Davies, Rt Hon Denzil (L'lli)


Aitken, Jonathan
Davies, Ronald (Caerphilly)


Anderson, Donald
Davis, Terry (B'ham, H'ge H'l)


Ashley, Rt Hon Jack
Deakins, Eric


Ashton, Joe
Dewar, Donald


Atkinson, N. (Tottenham)
Dixon, Donald


Banks, Tony (Newham NW)
Dormand, Jack


Barnett, Guy
Douglas, Dick


Barron, Kevin
Dover, Den


Beckett, Mrs Margaret
Dubs, Alfred


Bell, Stuart
du Cann, Rt Hon Sir Edward


Bennett, A. (Dent'n &amp; Red'sh)
Duffy, A. E. P.


Bermingham, Gerald
Dunwoody, Hon Mrs G.


Bidwell, Sydney
Eadie, Alex


Boothroyd, Miss Betty
Eastham, Ken


Boyes, Roland
Edwards, Bob (W'h'mpt'n SE)


Bray, Dr Jeremy
Ewing, Harry


Brown, N. (N'c'tle-u-Tyne E)
Fatchett, Derek


Brown, R. (N'c'tle-u-Tyne N)
Faulds, Andrew


Brown, Ron (E'burgh, Leith)
Field, Frank (Birkenhead)


Budgen, Nick
Fields, T. (L'pool Broad Gn)


Caborn, Richard
Fisher, Mark


Callaghan, Jim (Heyw'd &amp; M)
Flannery, Martin


Campbell, Ian
Foot, Rt Hon Michael


Campbell-Savours, Dale
Forrester, John


Canavan, Dennis
Foster, Derek


Clark, Dr David (S Shields)
Foulkes, George


Clay, Robert
Fraser, J. (Norwood)


Clelland, David Gordon
Garrett, W. E.


Clwyd, Mrs Ann
George, Bruce


Cockeram, Eric
Gilbert, Rt Hon Dr John


Cocks, Rt Hon M. (Bristol S)
Godman, Dr Norman


Cohen, Harry
Gould, Bryan


Coleman, Donald
Gow, Ian


Conlan, Bernard
Hamilton, James (M'well N)


Cook, Frank (Stockton North)
Hamilton, Neil (Tatton)


Cook, Robin F. (Livingston)
Hamilton, W. W. (Fife Central)


Corbyn, Jeremy
Hardy, Peter


Cox, Thomas (Tooting)
Harman, Ms Harriet






Harrison, Rt Hon Walter
Park, George


Hart, Rt Hon Dame Judith
Parry, Robert


Haynes, Frank
Patched, Terry


Healey, Rt Hon Denis
Pavitt, Laurie


Heffer, Eric S.
Ptmdry, Tom


Higgins, Rt Hon Terence L.
Pike, Peter


Hogg, N. (C'nauld &amp; Kilsyth)
Powell, Rt Hon J. E.


Home Robertson, John
Powell, Raymond (Ogmore)


Howarth, Gerald (Cannock)
Randall, Stuart


Hughes, Dr Mark (Durham)
Redmond, Martin


Hughes, Robert (Aberdeen N)
Rees, Rt Hon M. (Leeds S)


Hughes, Roy (Newport East)
Richardson, Ms Jo


Janner, Hon Greville
Roberts, Allan (Bootle)


John, Brynmor
Roberts, Ernest (Hackney N)


Jones, Barry (Alyn &amp; Deeside)
Robertson, George


Kaufman, Rt Hon Gerald
Rogers, Allan


Kilroy-Silk, Robert
Rooker, J. W.


Kinnock, Rt Hon Neil
Ross, Ernest (Dundee W)


Lamond, James
Rost, Peter


Leadbitter, Ted
Rowlands, Ted


Leighton, Ronald
Ryman, John


Lewis, Ron (Carlisle)
Sedgemore, Brian


Lewis, Terence (Worsley)
Sheldon, Rt Hon R.


Litherland, Robert
Shepherd, Richard (Aldridge)


Lofthouse, Geoffrey
Shore, Rt Hon Peter


Loyden, Edward
Short, Ms Clare (Ladywood)


McCartney, Hugh
Silkin, Rt Hon J.


McDonald. Dr Oonagh
Skinner, Dennis


McKay, Allen (Penistone)
Smith, Rt Hon J. (M'ds E)


McKelvey, William
Snape, Peter


MacKenzie, Rt Hon Gregor
Spearing, Nigel


McTaggart, Robert
Stewart, Rt Hon D. (W Isles)


McWilliam, John
Strang, Gavin


Madden, Max
Straw, Jack


Marek, Dr John
Taylor, Teddy (S'end E)


Marlow, Antony
Thompson, J. (Wansbeck)


Martin, Michael
Torney, Tom


Mason, Rt Hon Roy
Townend, John (Bridlington)


Maxton, John
Wareing, Robert


Maynard, Miss Joan
Weetch, Ken


Meacher, Michael
Welsh, Michael


Michie, William
White, James


Mikardo, Ian
Williams, Rt Hon A.


Millan, Rt Hon Bruce
Winnick, David


Miller, Dr M. S. (E Kilbride)
Young, David (Bolton SE)


Moate, Roger



Morris, Rt Hon A. (W'shawe)
Tellers for the Ayes:


Morris, Rt Hon J. (Aberavon)
Mr. Eric Forth and


Nellist, David
Mr. John Watts.


O'Brien, William





NOES


Adley, Robert
Brandon-Bravo, Martin


Alton, David
Bright, Graham


Amess, David
Brinton, Tim


Ancram, Michael
Browne. John


Arnold, Tom
Bruinvels, Peter


Ashby, David
Bryan, Sir Paul


Ashdown, Paddy
Buck, Sir Antony


Atkinson, David (B'm'th E)
Burt, Alistair


Baker, Rt Hon K. (Mole Vall'y)
Butler, Rt Hon Sir Adam


Baker, Nicholas (Dorset N)
Butterfill, John


Baldry, Tony
Carlile, Alexander (Montg'y)


Banks, Rooert (Harrogate)
Carttiss, Michael


Batiste, Spencer
Cash, William


Bellingham, Henry
Chalker, Mrs Lynda


Bendall, Vivian
Chope, Christopher


Benyon, William
Churchill, W. S.


Best, Keith
Clark, Dr Michael (Rochford)


Biggs-Davison, Sir John
Clark, Sir W. (Croydon S)


Blackburn, John
Clarke, Rt Hon K. (Rushcliffe)


Blaker, Rt Hon Sir Peter
Clegg, Sir Walter


Bonsor, Sir Nicholas
Colvin, Michael


Boscawen. Hon Robert
Coombs, Simon


Bottomley, Peter
Cope, John


Bottomley, Mrs Virginia
Corrie, John


Bowden, A. (Brighton K'to'n)
Couchman, James


Bowden, Gerald (Dulwich)
Cranborne, Viscount


Boyson, Dr Rhodes
Critchley, Julian


Braine, Rt Hon Sir Bernard
Crouch, David





Currie, Mrs Edwina
Lamont, Rt Hon Norman


Dickens, Geoffrey
Latham, Michael


Dorrell, Stephen
Lawler, Geoffrey


Douglas-Hamilton, Lord J.
Lawrence, Ivan


Dunn, Robert
Leigh, Edward (Gainsbor'gh)


Durant, Tony
Lennox-Boyd, Hon Mark


Dykes, Hugh
Lester, Jim


Eggar, Tim
Lilley, Peter


Emery, Sir Peter
Livsey, Richard


Eyre, Sir Reginald
Lloyd, Sir Ian (Havant)


Fallon, Michael
Lloyd, Peter (Fareham)


Favell, Anthony
Lord, Michael


Fenner, Mrs Peggy
Lyell, Nicholas


Fookes, Miss Janet
McCrindle, Robert


Forman, Nigel
McCurley, Mrs Anna


Forsyth, Michael (Stirling)
Macfarlane, Neil


Fox, Sir Marcus
MacGregor, Rt Hon John


Fraser, Peter (Angus East)
MacKay, Andrew (Berkshire)


Freeman, Roger
MacKay, John (Argyll &amp; Bute)


Freud, Clement
McNair-Wilson, P. (New F'st)


Gale, Roger
Major, John


Galley, Roy
Malins, Humfrey


Gardiner, George (Reigate)
Maples, John


Garel-Jones, Tristan
Marland, Paul


Gilmour, Rt Hon Sir Ian
Marshall, Michael (Arundel)


Glyn, Dr Alan
Mates, Michael


Goodhart, Sir Philip
Mather, Carol


Goodlad, Alastair
Mawhinney, Dr Brian


Gorst, John
Mellor, David


Grant, Sir Anthony
Meyer, Sir Anthony


Greenway, Harry
Mills, Sir Peter (West Devon)


Gregory, Conal
Morris, M. (N'hampton S)


Grist, Ian
Morrison, Hon C. (Devizes)


Grylls, Michael
Moynihan, Hon C.


Gummer, Rt Hon John S
Neale, Gerrard


Hamilton, Hon A. (Epsom)
Needham, Richard


Hampson, Dr Keith
Nelson, Anthony


Hancock, Michael
Neubert, Michael


Hanley, Jeremy
Nicholls, Patrick


Hannam, John
Norris, Steven


Hargreaves, Kenneth
Onslow, Cranley


Harris, David
Oppenheim, Phillip


Harvey, Robert
Ottaway, Richard


Havers, Rt Hon Sir Michael
Page, Sir John (Harrow W)


Hawkins, Sir Paul (N'folk SW)
Page, Richard (Herts SW)


Hayes, J.
Patten, Christopher (Bath)


Hayhoe, Rt Hon Barney
Pawsey, James


Hayward, Robert
Portillo, Michael


Heathcoat-Amory, David
Powell, William (Corby)


Henderson, Barry
Powley, John


Hickmet, Richard
Price, Sir David


Hicks, Robert
Raison, Rt Hon Timothy


Hind, Kenneth
Rathbone, Tim


Hogg, Hon Douglas (Gr'th'm)
Renton, Tim


Holland, Sir Philip (Gedling)
Rhodes James, Robert


Holt, Richard
Rhys Williams, Sir Brandon


Howard, Michael
Ridsdale, Sir Julian


Howarth, Alan (Stratf'd-on-A)
Robinson, P. (Belfast E)


Howell, Rt Hon D. (G'ldford)
Roe, Mrs Marion


Howell, Ralph (Norfolk, N)
Rowe, Andrew


Howells, Geraint
Rumbold, Mrs Angela


Hunt, David (Wirral W)
Ryder, Richard


Hunt, John (Ravensbourne)
Sackville, Hon Thomas


Hunter, Andrew
Sainsbury, Hon Timothy


Irving, Charles
St. John-Stevas, Rt Hon N.


Jackson, Robert
Sayeed, Jonathan


Johnson Smith, Sir Geoffrey
Shaw, Giles (Pudsey)


Johnston, Sir Russell
Shaw, Sir Michael (Scarb')


Jones, Gwilym (Cardiff N)
Shelton, William (Streatham)


Jones, Robert (Herts W)
Shepherd, Colin (Hereford)


Jopling, Rt Hon Michael
Shersby, Michael


Kennedy, Charles
Silvester, Fred


Kershaw, Sir Anthony
Sims, Roger


Key, Robert
Skeet, Sir Trevor


King, Rt Hon Tom
Smith, Sir Dudley (Warwick)


Kirkwood, Archy
Smith, Tim (Beaconsfield)


Knight, Greg (Derby N)
Soames, Hon Nicholas


Knight, Dame Jill (Edgbaston)
Speed, Keith


Knowles, Michael
Spencer, Derek


Knox, David
Spicer, Jim (Dorset W)






Spicer, Michael (S Worcs)
Vaughan, Sir Gerard


Stanbrook, Ivor
Viggers, Peter


Steel, Rt Hon David
Waddington, David


Steen, Anthony
Wakeham, Rt Hon John


Stern, Michael
Wallace, James


Stevens, Lewis (Nuneaton)
Waller, Gary


Stewart, Allan (Eastwood)
Walters, Dennis


Stewart, Andrew (Sherwood)
Ward, John


Stewart, Ian (Hertf'dshire N)
Wardle, C. (Bexhill)


Sumberg, David
Warren, Kenneth


Temple-Morris, Peter
Watson, John


Terlezki, Stefan
Wells, Bowen (Hertford)


Thatcher, Rt Hon Mrs M.
Wheeler, John


Thomas, Rt Hon Peter
Whitfield, John


Thompson, Donald (Calder V)
Wolfson, Mark


Thompson, Patrick (N'ich N)
Wood, Timothy


Thurnham, Peter
Yeo, Tim


Tracey, Richard



Trippier, David
Tellers for the Noes:


Twinn, Dr Ian
Mr. Gerald Malone and


van Straubenzee, Sir W.
Mr. Francis Maude.

Question accordingly negatived.

Main Question put and agreed to.

Resolved.
That a supplementary sum, not exceeding £930,000,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Treasury in connection with payments to the Budget of the European Communities not covered by direct charges on the Consolidated Fund under section 2(3) of the European Communities Act 1972, as set out in House of Commons Paper No. 439.

Orders of the Day — European Communities (Amendment) Bill

Considered in Committee [Progress, 27 June].

Clause 1

EXTENDED MEANING OF "THE TREATIES" AND "THE COMMUNITY TREATIES"

Amendment moved [27 June]: No. 7, in page 1, line 13, after `Communities)', insert
`but not Article 17 thereof .—[Sir E. du Cann.]

Sir Edward du Cann: I believe it was wholly wrong to truncate the debate on 27 June on the subject of tax harmonisation. It is also wrong that the time for the debate this evening is so limited.
For most of our fellow citizens there is no more significant subject than tax levels. The amount of tax that they have to pay, direct or indirect, is of crucial importance. Taxation is a subject of universal interest. I believe that it would be right to say that there will be universal fury if the future cost of living increased as a result of increases in taxation which are outside the control of this Parliament.
It may be convenient for the Committee if I rehearse the points that I was endeavouring to make in the earlier part of our debate. First, there is a strong impetus in the European Community to harmonise taxation—that is undoubted. It follows therefore that a vote against this amendment tonight is a vote for harmonisation. Secondly, if taxes are harmonised it will inevitably mean that the discretion of a British Chancellor of the Exchequer to decide the level of taxation in our country will disappear. It follows therefore that a vote againt this amendment tonight will be a vote for the impotence of the Chancellor of the Exchequer.
Thirdly, if, at the option of the Council, future taxes are harmonised, the influence and command of this House will inevitably be reduced. The sovereignty of this Parliament will equally reduce. It follows therefore that a vote against this amendment tonight would be a breach, on the part of those who walk through these Lobbies, of the clear undertaking given at the time of the great debates in our nation about the appropriateness or otherwise of signing the treaty of Rome.

Mr. Tony Marlow: Is there not an apt quotation from the Bible for those who will oppose this amendment tonight:
Father, forgive them; for they know not what they do.

Sir Edward du Cann: I should not like to swap biblical quotations with my hon. Friend but I think there is a growing sense of impatience among the British electorate at the apparent indifference of some Members of Parliament to the consequences of the situation in which we now find ourselves.
The fourth point I was endeavouring to make in our earlier debate was to ask whether the House of Commons was content that, in future, a non-elected commission should decide British taxation levels rather than the elected representatives of Britain. If that is so, it therefore follows


that a vote against the amendment is tantamount to deciding that, in taxation matters at any rate, we no longer wish to be masters in our own nation. [Interruption.]

The Chairman of Ways and Means (Mr. Harold Walker): Order. I should remind the hon. Member for Bournemouth, West (Mr. Butterfill) that it is not in order to pass between the Chair and an hon. Member who is addressing the Committee.

Sir Edward du Cann: The fifth point I was endeavouring to make was that there are substantial pressures for more money to be spent by the Commission. Strong evidence of that was given in the fifth report of the Select Committee on the Treasury and Civil Service which we have been discussing. Such evidence can also be drawn from the decision of the European Court during the course of the week. Members of this British Parliament will need no reminding of the constant intention of Members of the European Assembly to make themselves responsible for the expenditure of greater and ever increasing amounts of taxpayers' money.
As there are such pressures for the Community to spend more, it inevitably follows that a greater amount of revenue will be needed. The figure of VAT participation is already—unduly early—up to 1·4 per cent., and it is openly discussed that it will not be long before the figure requires to be 1·6 per cent.

Mr. Ian Gow: Is it the case that it is the policy of the Liberal and Social Democratic parties— there is no representative of either party here, which is why I must direct the question to my right hon. Friend—that the 1·4 per cent. limit on VAT should be raised to 2 per cent.?

Sir Edward du Cann: My hon. Friend does the electorate a service in emphasising that point. Let it be clearly understood that if at any time through some unfortunate mischance the Liberal and Social Democratic parties had any hand in government or influence over it, taxation would substantially rise, as my hon. Friend has pointed out, with an inevitable vicious twist to the rise in prices.
It follows that, if there are strong measures to spend more, and if more revenue will be needed, it is essential that our nation retains the right of veto over what nonelected people might propose in the Council. I hope that we shall have a clear undertaking from my hon. Friend the Minister that that will remain the case. It also follows from what I am saying that a vote against the amendment would be a vote for higher taxes.
Sixthly, I was endeavouring to make the point that it is essential that during the debate my hon. Friend the Minister should give us an assurance that the zero rate will remain. The zero rate is under challenge in the European Court, as right hon. Members already know. It is inevitable that if the zero rate goes, henceforward there will be VAT on such items as gas, electricity, water, food, books, and, I dare say, rents. We always set our face against taxation on certain commodities and services as a matter of social principle.

Mr. Jonathan Aitken: Children's shoes.

Sir Edward du Cann: My hon. Friend reminds me of a subject that gave rise to great political controversey in Britain.
We need a clear and categoric assurance from my hon. Friend the Minister that the zero rate will remain. It is certain that a vote for harmonisation and against the amendment in my name and that of other right hon. and hon. Members must mean that the zero rate will disappear.
Finally, when the debate was terminated I was endeavouring to make the point that there is something immoral as well as foolish and away from the traditions of the House in voting money before we understand properly what the expenditures will be for and how they will be supervised and controlled.
It is a dereliction of duty on the part of the House if it is willing to vote money to be spent by the European Community irresponsibly and in ever-increasing amounts with no proper system of control. Therefore, for all those reasons, I urge right hon. and hon. Members on both sides of the House to support the amendment.

Mr. George Robertson: At the beginning of my remarks I should reiterate the violent objection that so many of us in the Chamber this evening have to the way in which the debate has been artificially and ludicrously truncated. These are massively important issues for this Parliament and for Britain and to try to concertina them all into one-hour debates is to undermine Parliament's credibility in the eyes of the public.
It is interesting that it should be this debate that follows upon the previous one. The Government were able to drive their Estimates through the House of Commons—they have a majority to do practically anything that they want —but the two tellers for the amendment in the name of the right hon. Member for Worthing (Mr. Higgins) were both Conservative Members. However, it is worth putting on the record that one of them—the hon. Member for Slough (Mr. Watts)—was earlier this week appointed by the Prime Minister to be the chief finance officer of the Conservative and Unionist party. If in the same week of that gigantic elevation for a fairly young Member of the House he finds it impossible to support his Government, it tells us and the country something quite clearly about the trouble that the Government are in.
Why should we vote for the amendment this evening which on the face of it would eliminate from the Single European Act the new article 17? On the face of it, the new article 17 substitutes in the treaty of Rome a provision which would make voting on tax harmonisation unanimous and not subject to the majority rules that apply to the rest of the items which the Government make part of their drive towards the internal market. I say that that is what it says on the surface, but, as the right hon. Member for Taunton (Sir E. du Cann) has ably pointed out, that is a superficial analysis. Those hon. Members who listened to the previous debate, never mind the numerous other debates, simply do not believe the Government.
The previous debate this afternoon was on the European budget. Even the hon. Member for Eastbourne (Mr. Gow), who came to the House last October and assured us that the financial commitments of the Government would be obeyed, felt obliged to vote with the Opposition against the Government. All the promises and assurances that were given have been clearly shown to have little or no foundation, so why should the House believe the Minister and the Foreign Secretary when they tell us that article 17 is the ultimate guarantee for the


United Kingdom that we shall not have foisted upon us the harmonisation of our VAT rates with the rest of the EC?
Last June the Financial Times wrote a remarkably glowing account of Lord Cockfield's role within the European Commission. He was a Minister and had attracted little or no attention from anybody, never mind the Financial Times. However, the internal market crusade on which he was hell-bent did attract attention. The Financial Times said:
When it became clear that he was determined to press ahead with the idea of fiscal reform—bringing the indirect tax rates of member states roughly into line, so that frontier tax checks would prove superfluous — the idea caused consternation to the Treasury. Lord Cockfield was summoned back to Downing Street to explain himself".
We shall be told by the Minister that that is our great guarantee, because every time Lord Cockfield speaks out of turn the Prime Minister will drag him back to No. 10 and tell him that he is being naughty and that he is not allowed to do this part of what Lord Cockfield believes to be fundamental to the drive towards the internal market.
But Lord Cockfield is not alone. He is not the only one who believes that harmonisation of indirect tax is crucial to obtaining a proper and reasonable internal market in Europe. Sir Henry Plumb, the leader of the Conservative group in the European Parliament, and somebody who, I understand from the tapes—all that we have to rely on this evening — said that this afternoon's budget agreement in the European Parliament was a great triumph and something on which we should be congratulated. Sir Henry Plumb said on 11 December last year:
It is hard to see how there could be an internal market without a measure of harmonisation in fiscal matters.
I think that it is scarcely being sceptical, pessimistic or disruptive for us on these Benches to say to the Government that we are not happy about the assurances that have been given that article 17 and the unanimity rule will protect the British taxpayer from harmonisation of VAT.

Mr. Nigel Spearing: Can my hon. Friend confirm—the Minister might like to touch on this in reply — that existing directive No. 6 on VAT, which already requires a good degree of harmonisation, still applies irrespective of what is contained in this article? In other words, the Chancellor can still receive letters and be brought before the court in infraction proceedings if the existing VAT directives are not complied with.

Mr. Robertson: Absolutely. My hon. Friend, who is a great expert on the minutiae of these matters, makes a valid point, which I am sure the Minister will want to answer. The fact is that there is a body of evidence that can be deployed against the Government's assurances, although they are freely given and sound emphatic to many ears. That body of evidence would tend to raise doubts in the mind of anyone making an objective judgment.
An objective outside expert who wished to come to his or her own conclusion could also look at what was said by the House of Lords Select Committee on the European Communities in a voluminous report entitled "Indirect Taxation and the Internal Market". The Committee spent

a large amount of time on this because its terms of reference allow it to examine these matters in more detail than is possible in a Select Committee of this House. The Committee said at paragraph 111:
On the evidence before them, particularly on the basis of the experience of the Irish Republic and the United States of America, the Committee are convinced that the abolition of frontiers without first approximating indirect taxes would have unacceptable consequences".
The Committee said that from the basis of another belief that it has. It then said at paragraph 110:
The Committee believes that there is a good case for approximation of indirect taxes as an end in itself, in the interests of fair competition.
This great Select Committee, which includes a wide variety of knowledgeable peers, went on to say:
if it proved necessary to impose a low positive rate of tax on these items, the Committee consider that the disadvantages in the terms of cost of living would be compensated by the advantage of a broader tax base and perhaps a lower standard rate.
Their Lordships, of course, do not suffer the problems that those of us in the House of Commons have of being elected. One cannot imagine even the strongest federalists who may exist in the House of Commons going round advocating to people that we start levying VAT in its own right on food, children's clothes, books, gas and electricity — all areas that British Governments of whatever complexion since the introduction of VAT have chosen to exempt from that tax.

Mr. John Butterfill: Does the hon. Gentleman imagine that, if harmonisation did take place, it would automatically mean that we would have to drop our practices rather than other countries adopting some of ours?

Mr. Robertson: I can only imagine that the hon. Gentleman is being disingenuous. He knows what the reality is. After all, he is a member of a party that came to power in 1979 and said that it was not going to increase VAT, yet managed in its first Budget virtually to double it. Therefore, I do not think that he should expect anyone in the House, and certainly not the British people outside it, to accept that if harmonisation took place it would necessarily all be at the lowest rate and that we would not go on to Denmark's 22 per cent. VAT, France's 18·5 per cent., or Italy's 18 per cent. One can bet one's last ecu that, when harmonisation takes place, it will take place at the highest rate that can be got away with.

Sir Anthony Meyer: I listened with some surprise to the hon. Gentleman holding up the House of Lords Select Committee to obloquy because their Lordships are not elected. As I recall, in previous debates he has quoted with enormous approval the conclusions of the House of Lords Select Committee that these measures involved some diminution of the national power of veto.

Mr. Robertson: On the contrary, I am holding up their Lordships' report to considerable approval because I think that it pricks the balloon of the nonsense already spoken on this subject. Their Lordships point out their view of the advantages and say that they believe that the internal market cannot be accomplished unless that harmonisation takes place.
Therefore, we should look with the greatest scepticism and distrust at the fresh assurances being given to us by the Government. I do not believe that there is anything to


suggest that the Government mean any part of what they say; nor, indeed, even if they did, that they would be capable of controlling the great moving mountain once they started it on its trail. I therefore ask hon. Members on both sides of the House to vote for the amendment after this all too brief debate.

Mr. Butterfill: It is extraordinary that the speeches we have heard so far have assumed, first, that the unanimity provisions now proposed are not a substantial increase in the safeguards that the House and the British public have against any future action under the treaties; and, secondly, that in any future negotiations on harmonisation we shall be the ones who will change absolutely while nobody else will change at all.
I would be the first to acknowledge that it is eminently desirable that those goods that are presently zero-rated should remain zero-rated. I believe that, although indirect taxation in the form of VAT has many advantages, it is also necessary to protect the least well-off people in society from the effects of this somewhat restrictive tax. That is why successive Governments have chosen to exclude from the incidence of VAT essential commodities such as heating fuels, children's clothing, shoes and food. I do not see that we shall be unable to persuade our partners in the Economic Community that that remains a desirable objective for them as well.
It is not true to say that all other European countries have higher rates of VAT on many of these items than we have. Indeed, I have had many representations from the hotel and tourism trade in my constituency complaining that on many comparable commodities in the Community the rates are lower than in the United Kingdom and there is, thus, unfair competition.

Sir Edward du Cann: While I understand my hon. Friend's point about VAT and his idea that maybe we shall not be pressured to abandon the zero rate, if that is so, why is it that over many years there has been that pressure, and why has the United Kingdom been taken to the European Court by the Commission complaining about our zero rate and demanding that it be abolished?

Mr. Butterfill: It is certainly true that the Commission's objective is to achieve harmonisation, as it always has been. It is true that it has put pressure on all Governments who operate different rates from those of other member Governments in the Community. Their objective is undoubtedly to achieve standardisation, but I believe that it ought to be possible to deploy arguments with our partners to adjust many of the anomalies. There is no doubt that many of the anomalies and some of the high rates in other European countries are there as a hidden deterrent to some of our exports, and exist to the detriment of our own exporters.
France has been clever at arranging its rates of VAT to favour some of its products but to disadvantage some British products. There will undoubtedly be many ways in which harmonisation will be to the benefit of all of us. Therefore, we should not proceed with the pessimism that has been expressed in some parts of the House that automatically harmonisation will mean that all the things that we value, treasure and rightly seek to uphold will disappear, and we shall automatically go to everybody else's higher rate. That is not likely to be the case. It would

not be necessary in terms of the revenue objectives of the member Governments, so we should look at this much more constructively.
Under this article, we have much more control because, for the first time, it is spelt out unequivocably that any change must be unanimous. That is a great protection for the House and for any future Government.

Mr. Michael Foot: It is monstrous that the debate on these important questions should be compressed, and the speech made by the hon. Member for Bournemouth, West (Mr. Butterfill) underlines the effect of that.
Because of the falling of the guillotine, I shall summarise the important arguments made by the right hon. Member for Taunton (Sir E. du Cann), and ask that the Minister give a specific answer to certain questions. Is it the case that, with the passage of the Bill and the rejection of the amendment, the capacity of the British Government or the British Parliament to reject the imposition of VAT on books will be in any way weakened? I hope that the Minister will give a clear answer. If the answer is honest, it must be yes, and the House would not pass that proposition if it knew what it was doing.
Only a few months ago there was a huge outcry among the public when it was thought that the Chancellor of the Exchequer would impose VAT on books. Eventually, he rightly bowed to the protests and did not do so. Perhaps he had never intended to. However, I want to know from the Minister whether our power over such impositions is in any way diminished by the passage of the Bill.
The right hon. Member for Taunton mentioned other commodities and I want to know how the Bill will apply to them, and to the imposition of VAT on newspapers. Perhaps if the newspapers were to have VAT imposed on them without the British Parliament having a final say in the matter, they might start to awaken and understand what is happening in the House and what has been and will be done. It will not be much good British newpapers protesting in the future about the imposition of VAT on newspapers if they do not print the reports of the debates on these matters. I hope that the Minister will give us direct answers to those questions.

Mr. Eric Forth: Great and unbounded though my respect for my hon. Friend the Minister is, I am disappointed that this evening we do not have with us a Treasury Minister to give the Treasury view on this most vital matter. It must be self-evident to the Committee that the ability of any one member state to manage its affairs could be greatly affected and impeded by the proposals in this part of the Bill. I would have thought that the Treasury would have wanted to be represented this evening to reassure us that it is behind what is being proposed. I can only draw my own conclusions from the fact that my hon. Friend has been left, no doubt admirably and robustly, to defend the position. I am in some doubt as to why the Treasury has not seen fit to send a representative this evening.
Two aspects of this part of the Bill concern me. The first is a more superficial political one, although it surprises me that advocates of the Community and its development are prepared to take the political risk in the short to medium-term that may go with the imposition of harmonised VAT rates on such sensitive articles as children's shoes, food,


clothing or books. Those who wish the Community to develop rapidly would be disappointed, and would find their campaign set back considerably, were this to happen.
My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) spoke about the protection of the unanimity rule. We all know that the way in which the Community works is that any harmonisation will be done as part of a package. There will be a quid pro quo, or a trade-off, with other member Governments. They will say to our Government that if they all want to do this and the British Government particularly want to do that, part of the deal will be the imposition of VAT on food, children's shoes or whatever. That is why the apparent protection of the unanimity rule would not be as complete, total or reassuring as my hon. Friend asks us to believe.

Mr. Butterfill: My hon. Friend knows very well, because he has been a Member of the European Parliament, that the negotiations may involve a trade-off, but the trade-off might be a higher rate for goods that are already subject to VAT, so that we might go to a French or Danish rate on certain high value goods, but that would mean that we would then keep zero rating on food and other essential commodities. We would not necessarily have to sacrifice our exemptions.

Mr. Forth: My hon. Friend is right, but, as my right hon. Friend the Member for Taunton (Sir E. du Cann) said, the pressure has consistently been the other way. The evidence suggests that if there were to be a movement towards harmonisation it would be away from zero rating on items that we regard as sensitive.
There is a fundamental inconsistency between the stated demands of the Community for what is called in the jargon convergence, and the demands of tax harmonisation as an instrument of fiscal policy. Those who have a passionate belief in the Community believe that it is in its interests that we bring together the levels and rates of development and social and economic growth of all the member states. Instruments of policy have been devised in the Community to try to bring this about. One of the most notorious is the regional policy, which has misguidedly tried for several years to apply subsidies and taxpayers' funds to reduce what I believe are the natural differentials between the economies of the Community.
However, to bring about a convergence of economies as disparate and different as those of Denmark and Greece, or Luxembourg and Ireland in terms of gross national product per capita one must accept that for a long time to come the tax, fiscal and other domestic policies of these countries must be quite different, distinguished and differentiated. If one attempts to move towards tax harmonisation based on the argument of the internal market and the freedom of movement and the uniformity of policy one will endanger one of the other stated objectives of the Community—convergence.
Those who want the Community to progress and who adhere to and support convergence must come clean. They must tell us what they think it means, what they believe in and, more importantly, how they believe they will achieve that policy objective against a background of harmonisation of tax. It is not likely or possible to bring about the

convergence of the economies of Luxembourg and Ireland if we impose on them from the centre identical rates of tax for harmonisation.
Therefore, one of the reasons why I am opposed to the Bill and wish to support the amendment is that I fear that there is a lack of clear thinking from those who have framed the legislation. As is so often the case in discussions on the European Community, those who support it have submitted themselves to the warm and comforting sound of the words. We like the words "harmonisation" and "convergence". People feel comfortable with them. They like the idea that, some time in the future, Greece will be as wealthy as Denmark, or Ireland as wealthy as Luxembourg.
However, the great danger is that in allowing ourselves to be massaged by these words and to be made to feel comfortable by them we are allowing at the same time a continuing deception to be perpetrated whereby the policy objectives are quite different and, indeed, quite incompatible. Until I am much more satisfied that these objectives can be squared and, if I may use the term, can themselves converge, I am quite unable to support this part of the Bill.

Mr. J. Enoch Powell: When the right hon. Member for Taunton (Sir E. du Cann) said that a vote against this amendment was a vote in favour of harmonisation of taxes, he spoke nothing less than the literal truth. We are putting a new article into the treaty, and that article is mandatory. It says:
The Council shall … adopt provisions for the harmonisation of legislation
concerning taxation.
Reference was made at an earlier stage in the proceedings to the word "shall", and I am grateful to the Minister of State for having written to me since then on the subject. She is quite plain about it. She says that the meaning of the word "shall" is mandatory, as one would naturally assume it to be. She said:
The Council has a duty to act. That is the meaning of the word `shall'.
So we are deliberately writing into our law and into a new treaty an obligation which we are imposing upon the Council as a matter fo duty: to act in such a way as to bring about the harmonisation of indirect taxation. That view is reinforced, if one compares the wording of the old article which is being displaced. The old article said: "The Commission shall submit proposals to the Council." It then went on to say:
and the latter"— that is, the Council "shall decide upon the matter.
So what we are doing is perfectly clear. We are substituting for an obligation to decide upon a proposal from the Commission an obligation to pass proposals which carry with them the harmonisation of taxes.
What is quite certain about the harmonisation of taxes, whether it is up or whether it is down, is that the resultant system of taxation will not be one which this country has chosen. It will be a system of taxation which has been proposed to this House or which has been legislated for by this House. It cannot be harmonious and it cannot converge, if that is the case. There is no respect more than this in which the will to political power, by membership of the EEC and the EEC structure, is evident.
The alleged purpose here is the completion of the internal market. If the internal market means freedom of


exchange and freedom for the movement of goods, it is quite untrue to say that such freedom is dependent upon the approximation of the various tax systems in the different countries of the Community. All taxes have an economic effect. Therefore, if we want to harmonise the economies of two or more countries, we must enforce harmonised taxation in those countries, but there is no necessary connection between the harmonisation of taxation and the freedom of trade, other than that freedom of trades a pretext and a cover for the will to power and the will to political unification.
This is a mandatory provision which will bring that scope nearer by enforcing upon the Council, and by committing this House to enforce upon the Council, that harmonisation of taxation which is necessary for the creation of political unity but which is not necessary for the completion of an internal common market or a market for the free exchange of goods.

Mr. Richard Shepherd: I echo the words of the right hon. Member for South Down (Mr. Powell). I am not at all sure that there is any economic basis for this measure, in terms of the benefits that it will bring to the Community. In fact, it will be contrary to the interests of the Community, as it is trying, obviously, to edge its way towards a federal state.
I take up the right hon. Gentleman's argument by contrasting the measures that are implicit in this Bill with the states of the United States where there is a federal economy which has never insisted upon the constituent states harmonising their taxation. The very vigour of a much more vigorous economy than any economy in Europe is such that the flow of economic values from area to area reflects the exigencies or needs of each state and its tax policy. One gets more vigour from a wide economy by allowing flexibility of tax rates than one gets from imposing any other system.
We shall probably end up by levelling down the economic vigour and interests of the Community instead of raising them. This is very much against Britain's interests. Each nation should determine what is the most appropriate level for its tax rates. If we were to insist upon local authorities levying the same rates bills, it would mean suicide for some authorities. That is what we are trying to do by means of this absurd proposal. In economic terms, it has not been thought through convincingly.
Many people feel very strongly about the primary financial role of this House. The long march of every man towards a democracy in which people are free was due to the determination of this House to set its own rates of taxation. That is fundamental and it touches on the spirit of our people.
This is an abnegation of a very important principle. It is extraordinary that the Government feel that they can edge us towards something which will contradict our history, interests and outlook. If they really wanted to build up the Community, they would stand up against these preposterous announcements. Many people are in favour of free and open trade but that does not require harmonisation. Harmonisation would lead to shackles being placed upon individual nation states that can work well together and trade well together without this particular part of the Bill.

Mr. Ron Leighton: Our objection to this part of the Bill is the loss of fiscal

sovereignty. The right hon. Member for Taunton (Sir E. du Cann) was quite right. In the 1971 White Paper we were told that we should keep control over our indirect taxation, but the completion of the so-called internal market means that that will go. We were conned then and we are being cheated now.
If the proposal in the Commission's document 7674 were implemented, alien institutions outside this country, not elected by us, would decide upon the taxation of the British people. This House would give up its competence to vote Supply, the historic source of its powers. In the past the House wrested these powers from the king in the name of parliamentary government. Are we to surrender them now to those who would be unaccountable to the voters?
We are told that the completed internal market is to comprise an area without frontiers. Fiscal barriers are to be dismantled. To achieve this, indirect taxes are to be approximated throughout the area of the internal market. The most important of these indirect taxes are value added tax and excise duties. VAT occupies a special position in the EEC. Member states are required to adopt it as their principal indirect tax and are required to pay a proportion of the VAT receipts to the EEC as part of its own resources. We now pay about 11·5 per cent. of our VAT yield to the EEC.
Excise duties are levied on the consumption of such goods as wine, beer, spirits, tobacco and hydrocarbon oils. At the moment, VAT and excise duties vary considerably between the member states. Italy, for example, has VAT rates that go up to 38 per cent. Italy relies more on VAT because it finds that it is difficult to collect income tax. The Commission's white paper makes it clear that these duties will have to be approximated.
What would this mean, in particular, for the United Kingdom? If we take cigarettes, with the exception of Denmark, we have the highest rates of duty. On beer, with the exception of Ireland, we have the highest duty. On wine, again with the exception of Ireland, we have by far the highest duty, while Italy and Germany have none at all, and France virtually none. The main effect of approximation on the United Kingdom would be to lower excise duties, to increase VAT and to end zero rating. It would revolutionise our system of indirect taxation, and in the opposite way to that which most of us would want. It would shift taxation from alchohol and tobacco and load it on to everything else, including, for the first time, food and children's clothing. To come into line with the weighted average of the other member states we would have to increase the burden of VAT as a fraction of gross domestic product by two fifths while reducing the duties on alcohol and tobacco by about a quarter. So £4 billion would be taken off excise duties and placed on VAT. The total of VAT plus excise duties as a fraction of GDP would have to be increased by 10 per cent. The total indirect taxation on the British people would be increased, and by methods we would deplore.
No other state in the EEC, apart from Ireland, currently applies such broad relief from VAT as a result of exemption and zero rating. Fuel, transport and most foodstuffs are currently zero-rated in Britain. All that would go. Is that what we want to have foisted on us by bodies not elected by us and not responsible to the British people? It is a monstrous proposition that we should even consider it. The Chancellor could throw away his Budget box, because he would not be allowed to use it any more.
What is supposed to be the purpose of this? It is allegedly to abolish border controls, the physical barriers between member states, to end the distortion of competition caused by zero rating and to save money on bureaucracy. But investigation shows that little of this is likely to happen. Would frontiers disappear? Would those delays and checks at, for example, Dover end? They would not, because border controls would still remain for immigration, drugs, counterfeit goods and public security. Also, the United Kingdom's only land frontier is with the Irish Republic and perhaps, in the future, with the Channel tunnel. So all travellers would have to be stopped once to establish whether they had come from the EEC. Let us be clear that the physical barriers will remain.
Will we save much money by approximation? Again, the answer is no. The Commission proposes that exports between member states should cease to be zero-rated and that importers, provided that they will sell the goods on, could reclaim from their Governments VAT levied on imports by the country of export. That would increase the tax revenue in the country of export and reduce it in the country of import. Here is the rub—to deal with this, a "clearing house" procedure would be established for transferring the revenue raised on exports in the country of export to the tax authorities in the country of import, exactly offsetting the repayment claimed from them by the importer. An entire new bureaucracy is to be set up. Traders would have to supply more information under that arrangement than they do at present, increasing the cost of record-keeping. The Dutch Government have already said that they would not trust a system which did not involve communication between tax authorities on each individual transaction. Such a clearing house would raise serious questions on the compatability of data processing systems of the member states.
Spain and Portugal have only just introduced VAT and Greece has not done so. Yet the clearing house would require much improved procedures for mutual administrative assistance between tax authorities to prevent abuse — indeed, for it to work at all. It will be a bureaucratic nightmare. As it will not remove frontiers or border controls, as it will not be cheaper to administer, as it will remove decisions on taxation of the British people from their elected representatives and increase indirect taxation in the United Kingdom, including placing VAT on food, fuel, books, newspapers, transport and children's clothes, why on earth should we even consider this gross interference in our domestic affairs? We should not. We should reject it with contempt by passing the amendments. All that the internal market has done so far is to lead to the export of British capital and employment. We should vote against it tonight.

Sir Anthony Meyer: We have had a far better debate tonight because of the timetable motion than any debate we have had up to now. Hon. Members who spoke stuck to the point. I shall vote against the amendment and I shall do so with far more conviction than when I voted against the amendment which was proposed in the previous debate by my right hon. Friend the Member for Worthing (Mr. Higgins), because I cannot rid myself of the sneaking suspicion that the Community must be put under some sort of pressure to limit the growth in its budget, if only

because so much of the budget is spent on things on which the Community should not spend money, such as the inexorable growth in surpluses.
The amendment goes against what the Community should be doing because it is designed to make it more difficult for the Community to move towards the completion of the internal market. If the Community completes its internal market, it can do the things which it is especially well qualified to do. It can sustain a technologically advanced European industry and provide more jobs for the workers of Europe.
During the debate we have heard much from hon. Members on both sides of the House who oppose British membership of the European Community. I make it plain that my hon. Friend the Minister will come under every bit as much pressure from those Conservative Members who believe that we should go further as she will from those who do not wish to go as far as this. Those of us who wish to go further are much more representative of the Conservative party.

The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): Tonight we heard a slight horror story from the hon. Member for Newham, North-East (Mr. Leighton). If he were correct, it would be a horror story, but I am glad to say that he is not.
I shall concentrate on some of the facts because they should help to put hon. Members' minds at rest. First, the amendment seeks to delete from the scope of the Bill the new article 99 on the harmonisation of indirect taxation. Article 99 is not a commitment to tax harmonisation. Harmonisation is provided for only to the extent necessary for completing the internal market by 1992. It is more restrictive than the former article 99 because that provided for tax harmonisation,
in the interest of the common market.
It follows, therefore, that there is no diminution of sovereignty involved in the amendments to the treaty.
I understand the anxieties of my right hon. Friend the Member for Taunton (Sir E. du Cann), but they are much overplayed. Of course, there must be discussion on how far, if at all, the current differences in tax rates between member states must be reduced to complete the internal market, but no one can force the United Kingdom to increase its tax rates nor to reduce them because such decisions remain with our Chancellor of the Exchequer. Any change to the rules would require unanimity, and that is in no way changed by the Single European Act. Nor are hon. Members' powers to oppose the imposition of VAT on some items in any way diminished.
The rules that we already have—I am thinking here of the VAT directives — primarily establish, as far as possible, a common basis for the assessment of VAT from which most of the Community's resources derive. If everyone chose to operate the system under different rules, we should soon discover that some countries were paying more than was properly due and others were paying less.

Mr. Teddy Taylor: Is it the Government's policy that the internal market can be completed within the timetable laid down, by 1992, without the removal of the zero rate of VAT?

Mrs. Chalker: I am sure that it is possible to complete the internal market by 1992 without the removal of zero rate VAT. My hon. Friend has, on previous occasions in the debates on the Bill, suggested that if the Council failed


to agree on future harmonisation legislation and the Commission took the view that the United Kingdom was blocking progress it could take us to the European Court of Justice. I must put that misconception right. Article 99 lays down no obligation on individual member states. Under the article, it is for Council to adopt legislation to the extent necessary for the stated purposes. Once such legislation has been adopted by unanimity, a member state which, in the view of the Commission or that of other member states is not complying with that legislation, may then be taken to the court. No member state can be taken to court for refusing to agree on harmonising legislation. In that respect, too, the new article 99 is no different from the previous one.
Zero rating has been the substance of many hon. Members' contributions on 27 June and tonight. Zero rating in the United Kingdom is unaffected by the changes to article 99 which we are debating. Zero rates are expressly provided for under an existing directive which could be changed only with this country's agreement.
In his Budget speech in 1985, the Chancellor of the Exchequer said that the Government did not intend to propose extensions to the VAT base during the lifetime of this Parliament. I think that will answer the point of my right hen. Friend the Member for Taunton. We had further debate about zero rating because of the Commission's current challenge to the United Kingdom's interpretation of article 17 of the second VAT directive, which permits zero rating for,
clearly defined social reasons and for the benefit of the final consumer".
The Commission is challenging our zero rates only to the extent that they do not fall clearly into that category. Most items which are zero-rated in the United Kingdom, for example, food, children's clothes and the supply of gas and electricity to the final consumer, are not affected. We are, in any case, fighting the case vigorously in the European Court. However, I must stress again that that challenge predates new article 99 and will not, in any way, be affected by it.
In earlier debates on the Bill, the hon. Member for Walthamstow (Mr. Deakins) asked about the Council's ad hoc group on the removal of fiscal barriers. The group made its final report to the Economic and Finance Council on 16 June. The Council has now asked the Commission to present, by 1 April 1987 and without prejudice to the Council's position or that of individual member states, detailed proposals on the rate structures, and on the accompanying systems which the Commission regards as necessary for the completion of the internal market. This will help member states to assess the Commission's approach regarding especially its wider budgetary, economic, social and industrial implications. It does not, however, imply that we shall necessarily do that. That matter must be discussed and will ultimately be resolved by unanimity.
It has also been suggested that we shall come under pressure from other member states to harmonise duties or VAT rates—

Mr. Spearing: We have.

Mrs. Chalker: It has been suggested specifically in the context of article 99. However, there is no suggestion that there should be complete harmonisation of either VAT or duty rates. My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) said that it is hardly likely that other

member states will want the harmonisation which was suggested by some hon. Members because it could require France to increase wine duty by more than 200 per cent., Germany beer duty by more than 200 per cent. and Greece its duty on spirits by more than 2,000 per cent. Those threats are wholly unlikely and unrealistic.
The right hon. Member for South Down (Mr. Powell) referred to the letter which I wrote to him on 7 July in response to earlier debates on this matter in Committee. He referred to the word "shall" and the meaning of that word. He was right in everything that he said, but he did not go on to say that the Council has a duty to act, but only within the terms and discretion provided by the article. He should have added—

It being one hour after the House resolved itself into a Committee on the Bill, THE CHAIRMAN put the Question already proposed from the Chair, pursuant to the Order 1 July].

Question put, That the amendment be made: — The Committee divided: Ayes 149, Noes 212.

Division No. 250]
[8.15 pm


AYES


Adams, Allen (Paisley N)
Fisher, Mark


Anderson, Donald
Flannery, Martin


Archer, Rt Hon Peter
Foot, Rt Hon Michael


Ashton, Joe
Forrester, John


Atkinson, N. (Tottenham)
Forth, Eric


Banks, Tony (Newham NW)
Foster, Derek


Barnett, Guy
Foulkes, George


Barron, Kevin
Fraser, J. (Norwood)


Beckett, Mrs Margaret
George, Bruce


Bell, Stuart
Gilbert, Rt Hon Dr John


Bennett, A. (Dent'n &amp; Red'sh)
Godman, Dr Norman


Bermingham, Gerald
Gould, Bryan


Bidwell, Sydney
Hamilton, W. W. (Fife Central)


Boyes, Roland
Harman, Ms Harriet


Bray, Dr Jeremy
Harrison, Rt Hon Walter


Brown, N. (N'c'tle-u-Tyne E)
Hart, Rt Hon Dame Judith


Brown, R. (N'c'tle-u-Tyne N)
Haynes, Frank


Brown, Ron (E'burgh, Leith)
Heffer, Eric S.


Budgen, Nick
Hogg, N. (C'nauld &amp; Kilsyth)


Caborn, Richard
Home Robertson, John


Callaghan, Jim (Heyw'd &amp; M)
Howarth, Gerald (Cannock)


Campbell, Ian
Hoyle, Douglas


Campbell-Savours, Dale
Hughes, Dr Mark (Durham)


Clark, Dr David (S Shields)
Hughes, Robert (Aberdeen N)


Clay, Robert
Hughes, Roy (Newport East)


Clelland, David Gordon
Janner, Hon Greville


Clwyd, Mrs Ann
John, Brynmor


Cocks, Rt Hon M. (Bristol S)
Jones, Barry (Alyn &amp; Deeside)


Cohen, Harry
Kaufman, Rt Hon Gerald


Coleman, Donald
Kilroy-Silk, Robert


Cook, Frank (Stockton North)
Kinnock, Rt Hon Neil


Cook, Robin F. (Livingston)
Leighton, Ronald


Corbyn, Jeremy
Lewis, Ron (Carlisle)


Cox, Thomas (Tooting)
Lewis, Terence (Worsley)


Crowther, Stan
Litherland, Robert


Davies, Rt Hon Denzil (L'lli)
Lofthouse, Geoffrey


Davies, Ronald (Caerphilly)
McDonald, Dr Oonagh


Davis, Terry (B'ham, H'ge H'I)
McKay, Allen (Penistone)


Deakins, Eric
McKelvey, William


Dewar, Donald
MacKenzie, Rt Hon Gregor


Dixon, Donald
McTaggart, Robert


Dormand, Jack
Madden, Max


Dubs, Alfred
Marek, Dr John


du Cann, Rt Hon Sir Edward
Marlow, Antony


Duffy, A. E. P.
Martin, Michael


Eadie, Alex
Maxton, John


Eastham, Ken
Maynard, Miss Joan


Edwards, Bob (W'h'mpt'n SE)
Meacher, Michael


Ewing, Harry
Michie, William


Fatchett, Derek
Mikardo, Ian


Field, Frank (Birkenhead)
Millan, Rt Hon Bruce


Fields, T. (L'pool Broad Gn)
Miller, Dr M. S. (E Kilbride)






Morris, Rt Hon J. (Aberavon)
Shore, Rt Hon Peter


Nellist, David
Short, Ms Clare (Ladywood)


O'Brien, William
Skinner, Dennis


Park, George
Smith, (Ilsl'ton S &amp; F'bury)


Patchett, Terry
Soley, Clive


Pavitt, Laurie
Spearing, Nigel


Pendry, Tom
Stewart, Rt Hon D. (W Isles)


Pike, Peter
Strang, Gavin


Powell, Rt Hon J. E.
Straw, Jack


Powell, Raymond (Ogmore)
Taylor, Teddy (S'end E)


Prescott, John
Thompson, J. (Wansbeck)


Proctor, K. Harvey
Torney, Tom


Randall, Stuart
Walker, Bill (T'side N)


Redmond, Martin
Wardell, Gareth (Gower)


Rees, Rt Hon M. (Leeds S)
Wareing, Robert


Richardson, Ms Jo
Welsh, Michael


Roberts, Ernest (Hackney N)
White, James


Robertson, George
Williams, Rt Hon A.


Rogers, Allan
Winnick, David


Rooker, J. W.
Young, David (Bolton SE)


Ross, Ernest (Dundee W)



Rowlands, Ted
Tellers for the Ayes:


Ryman, John
Mr. James Hamilton and


Sheldon, Rt Hon R.
Mr. John McWilliam.


Shepherd, Richard (Aldridge)





NOES


Adley, Robert
Dykes, Hugh


Alexander, Richard
Eggar, Tim


Alton, David
Emery, Sir Peter


Amess, David
Eyre, Sir Reginald


Ancram, Michael
Favell, Anthony


Arnold, Tom
Fenner, Mrs Peggy


Ashby, David
Fookes, Miss Janet


Ashdown, Paddy
Forman, Nigel


Atkinson, David (B'm'th E)
Forsyth, Michael (Stirling)


Baker, Nicholas (Dorset N)
Fowler, Rt Hon Norman


Baldry, Tony
Fox, Sir Marcus


Banks, Robert (Harrogate)
Franks, Cecil


Batiste, Spencer
Fraser, Peter (Angus East)


Bendall, Vivian
Freeman, Roger


Benyon, William
Gale, Roger


Best, Keith
Galley, Roy


Biggs-Davison, Sir John
Gardiner, George (Reigate)


Blackburn, John
Garel-Jones, Tristan


Blaker, Rt Hon Sir Peter
Glyn, Dr Alan


Bonsor, Sir Nicholas
Goodlad, Alastair


Boscawen, Hon Robert
Grant, Sir Anthony


Bottomley, Peter
Greenway, Harry


Bowden, A. (Brighton K'to'n)
Griffiths, Sir Eldon


Bowden, Gerald (Dulwich)
Grylls, Michael


Boyson, Dr Rhodes
Gummer, Rt Hon John S


Braine, Rt Hon Sir Bernard
Hamilton, Hon A. (Epsom)


Bright, Graham
Hancock, Michael


Brinton, Tim
Hanley, Jeremy


Browne, John
Hannam, John


Bryan, Sir Paul
Hargreaves, Kenneth


Burt, Alistair
Harris, David


Butler, Rt Hon Sir Adam
Harvey, Robert


Butterfill, John
Havers, Rt Hon Sir Michael


Carlile, Alexander (Montg'y)
Hawkins, C. (High Peak)


Cash, William
Hawkins, Sir Paul (N'folk SW)


Chalker, Mrs Lynda
Hayhoe, Rt Hon Barney


Chapman, Sydney
Hayward, Robert


Chope, Christopher
Heathcoat-Amory, David


Churchill, W. S.
Heddle, John


Clarke, Rt Hon K. (Rushcliffe)
Heseltine, Rt Hon Michael


Clegg, Sir Walter
Hickmet, Richard


Colvin, Michael
Hicks, Robert


Coombs, Simon
Higgins, Rt Hon Terence L.


Cope, John
Hind, Kenneth


Corrie, John
Hogg, Hon Douglas (Gr'th'm)


Couchman, James
Holland, Sir Philip (Gedling)


Cranborne, Viscount
Holt, Richard


Crouch, David
Howard, Michael


Currie, Mrs Edwina
Howarth, Alan (Stratf'd-on-A)


Dorrell, Stephen
Howell, Ralph (Norfolk, N)


Douglas-Hamilton, Lord J.
Howells, Geraint


Dunn, Robert
Hunt, David (Wirral W)


Durant, Tony
Hunter, Andrew





Hurd, Rt Hon Douglas
Robinson, Mark (N'port W)


Jackson, Robert
Roe, Mrs Marion


Johnson Smith, Sir Geoffrey
Rowe, Andrew


Johnston, Sir Russell
Rumbold, Mrs Angela


Jones, Gwilym (Cardiff N)
Ryder, Richard


Jones, Robert (Herts W)
Sayeed, Jonathan


Jopling, Rt Hon Michael
Shaw, Giles (Pudsey)


Kellett-Bowman, Mrs Elaine
Shelton, William (Streatham)


Kennedy, Charles
Shepherd, Colin (Hereford)


Kershaw, Sir Anthony
Shersby, Michael


Key, Robert
Silvester, Fred


Kirkwood, Archy
Sims, Roger


Knowles, Michael
Skeet, Sir Trevor


Knox, David
Smith, Sir Dudley (Warwick)


Latham, Michael
Smith, Tim (Beaconsfield)


Lawler, Geoffrey
Soames, Hon Nicholas


Lawrence, Ivan
Speed, Keith


Leigh, Edward (Gainsbor'gh)
Spencer, Derek


Lennox-Boyd, Hon Mark
Spicer, Jim (Dorset W)


Lester, Jim
Spicer, Michael (S Worcs)


Lilley, Peter
Stanbrook, Ivor


Livsey, Richard
Stern, Michael


Lloyd, Sir Ian (Havant)
Stevens, Lewis (Nuneaton)


Lloyd, Peter (Fareham)
Stewart, Allan (Eastwood)


McCurley, Mrs Anna
Stewart, Andrew (Sherwood)


MacGregor, Rt Hon John
Stewart, Ian (Hertf'dshire N)


MacKay, Andrew (Berkshire)
Taylor, John (Solihull)


MacKay, John (Argyll &amp; Bute)
Temple-Morris, Peter


McNair-Wilson, P. (New F'st)
Terlezki, Stefan


Malone, Gerald
Thomas, Rt Hon Peter


Maples, John
Thompson, Donald (Calder V)


Maude, Hon Francis
Thompson, Patrick (N'ich N)


Mawhinney, Dr Brian
Thurnham, Peter


Meyer, Sir Anthony
Tracey, Richard


Morrison, Hon C. (Devizes)
Trippier, David


Moynihan, Hon C.
Twinn, Dr Ian


Neale, Gerrard
van Straubenzee, Sir W.


Needham, Richard
Vaughan, Sir Gerard


Nelson, Anthony
Viggers, Peter


Norris, Steven
Wallace, James


Oppenheim, Phillip
Waller, Gary


Ottaway, Richard
Ward, John


Page, Sir John (Harrow W)
Wardle, C. (Bexhill)


Page, Richard (Herts SW)
Warren, Kenneth


Parkinson, Rt Hon Cecil
Watson, John


Patten, Christopher (Bath)
Watts, John


Pawsey, James
Wells, Bowen (Hertford)


Percival, Rt Hon Sir Ian
Wheeler, John


Portillo, Michael
Wilkinson, John


Powell, William (Corby)
Wolfson, Mark


Powley, John
Yeo, Tim


Renton, Tim



Rhodes James, Robert
Tellers for the Noes:


Ridsdale, Sir Julian
Mr. Tim Sainsbury and


Rippon, Rt Hon Geoffrey
Mr. Michael Neubert.

Question accordingly negatived

Mr. Alan Williams: On a point of order, Mr. Walker. I understand that within the last few minutes the Government have been defeated by 18 votes in the House of Lords on the Dockyard Services Bill. You will recollect, Mr. Walker, that in today's business statement that Bill was listed for consideration by the House on Friday 18 July. I ask you to use your good offices on behalf of the Opposition to ask the Leader of the House if he will come here tomorrow at 11 o'clock to make another business statement to the effect that the Dockyard Services Bill, in view of its now prime importance, will be accorded prime time on a normal day.

The Chairman: The right hon. Gentleman knows that we are in Committee and that the point he has raised is not a matter for the Committee or for me. No doubt what he has said will be communicated to the Leader of the House.

Mr. John McWilliam: Further to that point of order. The Committee is aware of the importance of the Dockyard Services Bill and the effect that the resultant Act would have on our strategic ability to defend ourselves in time of war. May I ask you to prevail upon Mr. Speaker to consider today's business statement and to ask Mr. Speaker why a vital Bill like this that affects our strategic capabilities— —

The Chairman: Order. I remind the hon. Gentleman that we are on a tight timetable and that a large number of hon. Members wish to speak on the business before the Committee. I cannot usefully add to what I have already said.

Mr. Teddy Taylor: I beg to move, in page 1, line 13, after `Communities)', insert 'but not Article 20 thereof.

The Chairman: With this it will be convenient to consider amendments Nos. 23, 24 and 25.

Mr. Taylor: Article 20 refers to economic and monetary union. The purpose of the amendment is essentially to find out what article 20 is about and precisely to what it committed the Government. More important, we wanted to get the advice of the Minister clearly on the record. Our experience of getting European matters on the record is not a good one. Earlier today we had a discussion about the European Budget and we said that only a few months ago we had the clearest of assurances that budgetary control was now applied and that expenditure on agriculture would be contained and that the 1·4 per cent. VAT rate would last for several years. Those assurances have been proved to be utterly worthless, and budgetary control has not been practised. This issue is rather less emotive than expenditure and I ask my hon. Friend the Minister of State to say exactly what Great Britain is committing itself to under article 20. It could be argued that we are confronted with nonsensical verbiage which means nothing, or that we are committing ourselves to the convergence of monitary policies within the EEC. If we are committing ourselves to such policies, we are taking a big step. It is something that we should discuss and think about extremely clearly. As these matters have been set out in a treaty and are being set out in law, it is possible for the European Court, on an approach to the Commission, to interpret policies that are applied by the Council or member states.
8.30 pm
Is it a good thing for Britain to have harmonised our convergent economic policies with other members of the Common Market? We have a number of international relationships with OECD countries and we have commitments through the GATT to reduce tariffs. Is it good for Britain to enter an economic union that would be part of a political union? Is it in our interests to do so? I can well remember those who said when we joined the EEC that our entry would prove to be a recipe for more jobs, more prosperity and better trade with EEC countries. We have found, to the disappointment of many and the surprise of some, that far from achieving those goals we have entered a period of economic decline and mass unemployment. We have a horrific deficit with the EEC in our manufacturing trade of no less than £10,000 million. Is it in Britain's interests economically to join up more with a part of the world which is clearly in structural

decline? Our trade figures show that we have a horrific deficit in manufacturing trade with the Common Market and a substantial surplus in manufacturing trade with the rest of the world, and the gap is growing. Unemployment figures throughout the world show that the areas of growth and job creation are far away from the EEC.
The second factor which should make us wonder whether it is a good thing to tie ourselves up in economic terms with the EEC and to harmonise economic policies is the structural decline of the area. Do we wish to become a peripheral part of it? I am probably more aware of these issues than most because I have spent most of my life as a politician in Scotland. For years the English have put vast sums into Scotland and Northern Ireland to try to equalise the ability to create jobs, welfare and prosperity. Despite all the endeavours of the English, Scotland has not enjoyed the same prosperity as that which has been present south of the border. That is not the result of a nasty plot on behalf of the English. The answer is that there is a natural economic movement and tendency for jobs, decision making and investment to move towards the centre of the market.
I find myself now in a prosperous part of the United Kingdom, but Southend does not have the grants, allowances and bonuses in terms of public expenditure that are received in the north. If we harmonise economic policies and make ourselves a greater part of economic and monitary union, I fear that Britain will become a peripheral part of an area of the world which is clearly in structural decline. It is an area that is suffering from mass unemployment, and it faces serious problems in competing with the growth areas of the world.
To what are we committing ourselves in the convergence of economic policies? We must bear in mind that the United Kingdom, especially under my right hon. Friend the Prime Minister, has a particular attitude to economic affairs. Will we not be removing our freedom and the liberty of the House to determine Britain's economic policies if we agree to the harmonisation of economic policies within the EEC? We know that most of the countries of Europe have Governments that are far to the left of that of the United Kingdom. Other European countries are more interventionist in their ideas. We know that most European countries believe in the expansion of public expenditure. I ask the House seriously to consider whether the clause commits us, however gradually, to the cohesion, harmonisation or convergence of economic policies. Does it not remove a huge amount of the ability and freedom of the British Government to determine their own economic policies?
Another factor is the commitment to harmonise monetary policies. It might be helpful if the Government were to say at this stage exactly what their attitude is to the European monetary system and why they think that it is a good thing. I have been heartened by many of the things which the Prime Minister has said from time to time on the Common Market. I was delighted on 11 March to hear her say that we would fight against the supplementary budget of £1 billion that had been put forward by the Commission. I was disheartened today to learn that, instead of fighting hard, we had caved in within six hours and had agreed to another supplementary budget, and one which is larger by £1 billion than its predecessor. I was heartened, however, by what the Prime Minister said on the EMS on 10 June. She said:


At present there is no intention of joining the European monetary system. To do so would deny us an option that we have at present … We would be denied the option of taking the strain on the exchange rate. I do not think it right to deny us that option at present.—[Official Report, 10 June 1986; Vol. 99, c. 171.]
In other words, my right hon. Friend the Prime Minister thought that joining the EMS would remove the option of taking the strain of economic pressure on the exchange rate instead of on interest rates, fiscal policy or other forms of restriction. My right hon. Friend has always taken the view that we believe in a free exchange rate. On the other hand, other Ministers have said, especially Foreign Office Ministers, who appear not to have the same convergence as the Prime Minister and as the Government are hoping that we shall have with other Common Market countries, that Britain wants to join the EMS when the time is right. It would be helpful if we could have some indication from the Foreign Office, whose policies seem to be partially at variance with those of the Prime Minister, of the circumstances that it would deem to be appropriate for joining the EMS. Secondly, is it the Government's clear intention and desire to join the EMS when they think that the circumstances are right? If this is the position, perhaps the Foreign Office will explain the advantage to Britain of joining the EMS when the time is right.
If we were to join the EMS, the Government would be restricted severely in protecting the pound at times when it came under attack. If there were pressure on the pound, we would have to use the nasty devices that we employed when Britain had a fixed exchange rate. The choice of joining the EMS or not is rather similar to the choice of opting for a fixed or varied exchange rate. Like everything else, money has its market price. It helps our economy if we let the exchange rate take the strain instead of declaring an artificial rate for our currency. If we opt for an artificial rate, nasty things have to be done, such as taking unpleasant decisions on fiscal policy and interest rates. Freedom for our exchange rates, in so far as it is reasonably possible, assists in securing the freedom of our economy. I believe that most Conservatives believe that it is helpful.
There are a number of people—especially our friends in the CBI — who seem to regard the Common Market with a great deal of delight. The CBI has said that it would be good for Britain if we were to join the EMS as our entry would assist trade, but in a way that I cannot understand. It says that a fixed exchange rate with the rest of Europe would help us to export goods to Europe in a way that would not help other Europeans to export their goods into Britain. I cannot understand the logic of that argument. If we were to join the EMS, we would restrict severely the freedom of the Chancellor of the Exchequer. The freedom that we have had since opting for a free exchange rate would be denied to us, which would present problems for a country which depends considerably on income from oil and oil resources.
I hope that the Government will explain exactly what we commit ourselves to in article 20. Is it nothing, just a general sentiment? Or is it the Government's clear intention to harmonise our economic and military policies with the EEC, as opposed to maintaining our alliance with the rest of the world?
I hope that the Government will bear in mind the possible danger to us in a harmonised economic and

monetary policy of further problems with our relationship with the United States of America. I have been extremely worried at the way in which the crazy CAP is driving a wedge between Europe and the United States. Contact between Britain, Europe and the United States is absolutely vital and helps us towards an internationalist position, instead of being part of a narrow protectionist group surrounded by a high tariff wall.
All the signs are that the EEC is becoming more protectionist, not merely through tariffs, but through some of its non-tariff measures, voluntary restraint agreements and so on. A move towards economic and military union would be a step towards removing a great deal of freedom and liberty which we enjoy in economic policy, and towards protectionism in Europe which is, I believe, where we are going and what the intention is. I hope that the Government will say what is involved and that they will clarify their view on economic and military union.

Mr. George Foulkes: One of the most discomfiting things about these debates is that we in the Labour party often find ourselves agreeing with the hon. Member for Southend, East (Mr. Taylor). Having disagreed with him on many occasions in the past, I am glad to have found one statement in his speech to disagree with. He talked about the huge sums being pumped into Scotland. That happened when he represented Glasgow, Cathcart because there was a Labour Government, but since he was, rightly, removed by the electorate the opposite has been happening and money is not being invested in areas such as Glasgow as it was under the Labour Government.

Mr. Teddy Taylor: I am sorry that things are not so good in Scotland now as when I left it. Will the hon. Gentleman at least accept that, whereas England has tried to invest money in Scotland, Britain is committed to pouring large sums into the continent of Europe?

Mr. Foulkes: Again I partly agree with the hon. Gentleman. It is not since he left Scotland but since the Labour Government left office that Scotland has been disadvantaged.
It is clear to the House that the whole tenor of the Single European Act from the preamble, with its talk of moves towards European union and economic integration, to the extra powers and the competencies of the Community institutions, is towards a united states of Europe or a federal Europe. It is clear that that is happening because the parents of the Single European Act, the people who were behind its genesis, such as Spinelli and Dooge, are passionate enthusiasts for European integration. I do not doubt their sincerity, but we in the Labour party disagree with what they are trying to do and with the way in which they are trying to move the United Kingdom within Europe.
Only a few years ago I was told by hon. Members on both sides of the House that Spinelli was a fanatic and a wild dreamer, and that old men were entitled to their dreams and not to worry. I am sure that those comments sound better in Italian. In reality, a great deal of what Spinelli has been pressing for is now becoming a reality. When one considers the Spinelli treaty passed by the European Parliament on 14 February 1984, of the four main parts, three are now incorporated in the Single European Act and will soon become law.

Mr. William Cash: Does the hon. Gentleman recall that Spinelli is a Communist and always has been? What influence does he attach to that?

Mr. Foulkes: I would attach no importance whatever. Spinelli was an integrationist and was in favour—

Sir Anthony Meyer: Will the hon. Gentleman give way?

Mr. Deakins: On a point of order, Mr. Deputy Speaker. Would it be in order to remind hon. Members that they have no need to give way to hon. Members who sought to truncate the debate by voting for the guillotine?

Mr. Foulkes: I am grateful to my hon. Friend.
The three Spinelli proposals incorporated in the Bill are important. They arc for an institutional status for the European Council, greater majority voting and a central role for the European Parliament in the legislative process. Only the new system for appointing the Commission is not yet included, but no doubt we shall have pressure also to include that.
The Labour party argues that with the accession of Spain and Portugal there is in the EC a much wider disparity in wealth income, interests and so on. Therefore, talk of tax convergence and economic integration is less relevant now than it has been at any time in the history of the Community. The original aims of the Community—to prevent a further war in western Europe, to integrate Germany after the destruction of the war, and to enable western Europe to deal on an equal basis with the superpowers—were laudable, but they have been lost in the detail of the specific, unnecessary harmonisation, whether A be of the size of eggs or the noise of lawnmowers, as it was so eloquently described earlier. As one of my hon. Friend's said, the move is no doubt so that lawnmowers can pass freely across borders in the EC. I am sure that many lawns cross borders, but when the noise levels of lawnmowers is harmonised it will undoubtedly be much easier for them to cross borders.

Mr. Butterfill: rose——

Mr. Foulkes: The great ideals have been lost in detail and in the scandal of the cost of storage and of destruction of foodstuffs. Above all, with today's wider, looser Europe, joining the exchange rate mechanism of the European monetary system is also less relevant now than at any time previously. I certainly endorse the questions which the hon. Member for Southend, East asked the Minister, and I hope that we shall receive clear answers.
We in the Labour party support European cooperation, but European co-operation between independent nations and parliaments, not between parts of a united states of Europe. We support the use of a range of different mechanisms for co-operation. One forgets the good job being done, for example, by the Council of Europe and its Committees. We are aware that technical co-operation can take place beyond the framework of the Community—for example, the European airbus, which had nothing to do with Community institutions. Political co-operation takes place within the Community on issues which include other countries, and in some cases some Community countries reserve their position.
We support the amendment and reject the move towards closer economic integration and convergence in Europe. We unequivocally oppose the move towards a European super state or a united states of Europe.

Mr. Budgen: I so often and usually completely agree with my hon. Friend the Member for Southend, East (Mr. Taylor) that I want to make only one point and to explain where I disagree with what he said. In his opening remarks he asked whether Europe was good for Britain, and talked about Europe being an area in structural decline. He made what seemed to be an essentially materialistic argument.
I dislike the idea of economic convergence, because I believe that a nation is perfectly entitled to choose policies and laws which may exhort objectives which are not materialistic. For the sake of argument, a nation is perfectly entitled, if it wishes, to say that a quarter of its population may be Roman Catholic priests. Perhaps that was the position at one stage in Spain. A nation is perfectly entitled, if it wishes, to educate a large number of people in the classics. That may well not have an immediate effect upon its GNP. My hon. Friend the Member for Southend, East (Mr. Taylor) was arguing as if there were some obviously agreed priorities in every nation state that they would subvert all other objectives to the improvement of their wealth and riches.
I object to the idea of economic convergence because of the second argument that my hon. Friend put forward. The British people are perfectly entitled to have the sort of economy that suits their character. In my opinion, they should be able to have that sort of economy without the disadvantage of being constantly barracked and harassed by their politicians telling them to work harder or being exhorted by the Europeans to become more European minded. Of course, it is for the politicians to explain to them that if they happen to like striking, for example, or if they happen to like sleeping in hay fields during the summer they are unlikely, at the same time, to be producing consumer goods. We do not want to suggest at any time that the sole purpose of a modern state is to increase wealth, more especially to increase taxable wealth. The people of any state always have a diversity of objectives and they show it in a variety of inconsistent but none the less important ways. One of the great vulgarities of modern thought and the distorted idealism of the European concept is the belief that we are all exclusively materialistic beings.

Mr. J. Enoch Powell: In this debate we are arguing and eventually voting for or against the principle of monetary union. If I am asked how I know that, my answer is because it says so. By article 20 we are writing into the law and the treaty
Chapter 1,
Co-operation in Economic and Monetary policy (Economic and Monetary Union)
Note the brackets. It begins:
In order to ensure the convergence of economic and monetary policies which is necessary".
There is nothing which comes nearer to sovereignty, self-government or what politics is about than control of money. From the beginning of time it has been the attribute of sovereigns that they made or declared money. Their image and superscription was found upon it. That is what made it money. In our day, supremely the subject in politics about which we dispute, debate and vote between elections is about how the control of money shall be exercised and how the state to which we belong shall use the power of the modern state to make, or sometimes to unmake, money.
There are signs that a general election has been discerned on the horizon by the parties in the House. One


of the principal issues, if not the principal issue, between the parties which will be put to the electorate is alternative ways in which the British state ought to use the money-making power. If there is to be monetary union, that decision is to be taken away from the British people. It is no longer to be a subject of politics in this country. It is a subject which will be decided by the general and common authorities of a monetary union. Consequently, there is nothing more directly and clearly inimical to the political process in this country than the professed intention to enter into a monetary union. We are professing that intention by what we do in this article and by an extraordinary procedure. It was your decision, Mr. Walker, that amendment Nos. 23 and 25 should be debated with amendment 9 by the extraordinary procedure of writing a preamble into the law of this country. The preamble uses important words. It states:
Moved by the will … to transform relations … into a European Union.
It goes on:
Whereas at their Conference … the heads of State … approved the objective of a progressive realisation of Economic and Monetary Union.
It is all very well, and it will no doubt happen, for the Minister to tell us from the Dispatch Box to take no notice. She will say that it is not binding, that it is the preamble and that it is just words and has no effect. However, that is not what we will be told when it becomes an Act. That is not what we shall be told when steps are taken and enforced upon us, possibly by a guillotine in due course, towards economic and monetary union. We shall be told "In 1986 the House of Commons said so. The House of Commons embodied those words in an Act of Parliament." That is not nothing. After all, this Government make agreements with foreign powers about the government of the United Kingdom under which they undertake to make determined efforts to come to agreement with those foreign Governments on the internal affairs of the United Kingdom. Are we to be told that those words will never be quoted against us in future and that we shall never be told that we approved those objectives solemnly and put them on the statute book of this country by writing the words of a preamble into an Act of Parliament?

Mr. Cash: rose——

Mr. Powell: I shall give way to the hon. Gentleman, because he voted against the guillotine.

Mr. Cash: Would the right hon. Gentleman agree that it is not simply a question of how that matter will be interpreted in our own court but, by virtue of the European Communities Act 1972, it is also a question of it being interpreted by the European Court of Justice and its methods of interpretation take us into a completely new dimension? The question that the right hon. Gentleman is putting to the House will be interpreted by the court further and toward the notion of European union which could invoke federalism in due course.

Mr. Powell: I am wholly in agreement with the hon. Gentleman. He has performed a service to the debate by emphasising that point. We are not doing nothing by this legislation. We are doing something which is significant. It is something which will be quoted against us in future

and to which we will be held, if not by future Governments of this country, by authorities external to this country with which we are making a new compact. It is a renunciation of the rights, the sovereignty and the political entity of the people of this country, and we ought not to be engaged in it.

Mr. Spearing: I reiterate precisely what the right hon. Member for South Down (Mr. Powell) has said. In respect of the authority of other courts I shall quote the memorandum from the Foreign Office in appendix A to the report of the Select Committee on Foreign Affairs. It talks about the preamble to the treaty and says:
It typically recites the purposes of the Treaty and the background against which agreement was reached. Its principal significance is as part of the context of the Treaty for the purposes of its interpretation.
That is what the European Court will rest on if the British Government and this Parliament is taken to court for not moving towards economic and monetary union which is clearly spelt out in the preamble to the treaty and in article 20, which we now wish to delete. I shall take it further than the right hon. Member for South Down. I am sure that he will agree that economic and monetary union requires an authority to exercise the policy in respect of money and economics throughout the area of the union. At the moment, that is exercised, alternately perhaps, by the Bank of England, the Treasury and the House—a sort of internal triangle of economic and monetary policy. What would it be if that policy and the authority -were transferred to European institutions? Article 20 spells it out clearly in paragraph 2, which states:
Insofar as further development in the field of economic and monetary policy necessitates institutional changes, the provisions of Article 236 shall he applicable.
9 pm
That means that any member Government can propose amendments to the treaty. The paragraph goes on:
The Monetary Committee and the Committee of Governors of the Central Banks shall also be consulted regarding institutional changes in the monetary area.
I repeat:
the Committee of Governors of the Central Banks".
Whether this country joins the European monetary system, which is connected to, but separate from, European monetary union, the latter implies not only a central monetary authority, but one that decides or influences such matters as the interest rate and exchange rate policy. In respect of exchange rates, article 20, or another article, changes article 70 of the treaty of Rome, paragraph 1 of which states:
The Commission shall propose to the Council measures for the progressive co-ordination of the exchange policies of Member States in respect of the movement of capital between those States and third countries. For this purpose the Council shall issue directives, acting unanimously. It shall endeavour to obtain the highest possible degree of liberalisation.
That is how article 70 stands, but the Single European Act changes the unanimous provision to one of qualified majority. In other words, it means that the control of our own exchange policies — I know that the present Government do not have a policy in that direction, but future Governments might — will no longer be in the hands of the British Government and of Her Majesty's Treasury should the House so wish and should the majority of the electorate so wish. It will be in the hands of authorities elsewhere. I leave hon. Members to suspect or guess who will be the most influential member of the Committee of Governors of the Central Banks. Of course,


it will be the most influential currency at the time when decisions have to be made. I do not have to tell hon. Members that the most stable and strongest international currency inside the EEC is the deutschmark. I think that is generally agreed.
The proposals implicit in the so-called European common Act will impel this country into an economic and monetary union where central authority is basic to its thesis, and where a new economic imperialism will depend upon this country in just as sure a way as a new economic imperialism made itself felt across the border, as evinced in the exchanges between my hon. Friend the Member for Carrick. Cumnock and Doon Valley (Mr. Foulkes) and the hon. Member for Southend, East (Mr. Taylor). I believe that Conservative Members who are not in the Chamber do not know what the amendment is about. If they did, they would not vote against it.

Mrs. Chalker: Several hon. Members have suggested during the debate that the Single European Act embodies new commitments to economic and monetary union, and to European union. The first thing that I must say is that it does not. The term "economic and monetary union" is not a new concept, yet tonight anybody would have thought that it was. Let me remind the Committee that it has been accepted by every British Government since we joined the Community. For instance, it was a Labour Government who subscribed to the European Council's statement in November 1976 that
the achievement of economic and monetary union is basic to the consolidation of Community solidarity and the establishment of European Union.
Those may not have been words that a Conservative Government would have used, but they were used by a Labour Government, with the support of many Opposition Members, some of whom may not be here tonight.
Some of my hon. Friends said that monetary cooperation between member states was a new concept, a new idea. Member states already have an obligation to coordinate their economic policies under article 105 of the treaty of Rome. That has been with us since 1972. The references to monetary co-operation in the Single European Act are defined as being "in accordance with the objectives of Article 104." No new obligations are involved.

Mr. Eric Deakins: Then why have it?

Mrs. Chalker: It is there for a good reason. It brings together all the parts that, in the past, we wanted to be brought together. It is nothing new. The way in which it is drafted carries no new implication—for instance, that all member states, including the United Kingdom, should participate fully in the exchange rate mechanism. That is not contained in the article. The point is that the new articles merely formalise the existing position.

Mr. Spearing: What about the preamble?

Mrs. Chalker: I shall turn to the preamble in a moment. The other thing that the article does not do is to open the door to any new proposals that we would be forced to accept against our better judgment. I know that many of my hon. Friends have been concerned about that. However, they seem to have forgotten that the Commission already has the right, under article 235, to make proposals in the monetary sphere. For instance, the

regulations setting up the ecu were adopted under article 235. In such cases, a unanimous Council decision has been required and will continue to be required.
Moreover, the Single European Act stipulates that any further institutional developments in the field of economic and monetary policy will be governed by article 236. That means that they must be agreed by all member states and approved by their national Parliaments. In other words, they must be brought forward in a treaty form and have the approval of the Parliament concerned as well as the other 11 national Parliaments.

Mr. Spearing: The Europeans as well?

Mrs. Chalker: The hon. Gentleman, who spoke at considerable length in our earlier debates, tempts me to go over old ground. For the sake of those who asked questions tonight, and because only a short time is available, I shall not do so.
I turn to the broader question of European union that a couple of my hon. Friends and the hon. Member for Newham, South (Mr. Spearing) raised. As is customary, the preamble recalls existing commitments, such as the treaty of Rome, which lays the foundations of an ever closer union among the peoples of Europe. The Stuttgart solemn declaration identifies union as being achieved by
deepening and broadening the scope of European activities so that they coherently cover, albeit on a variety of legal bases, a growing proportion of member states' mutual relations and of their external relations.
That means practical steps, not vague constitutional concepts. That is why article I of the Single European Act, which has been debated previously, refers to
making concrete progress towards European unity.

Mr. Marlow: rose— —

Mrs. Chalker: If my hon. Friend is quick——

Mr. Marlow: I shall not even thank my hon. Friend for giving way. Can my hon. Friend tell us what significance the preamble will have in the eyes and the judgments of the European Court of Justice?

Mrs. Chalker: We are to have a debate on that subject later tonight. My hon. Friend already knows that the preamble to the treaty is an integral part of it. It does not confer rights or obligations.

Mr. Spearing: Oh yes, it does.

Mrs. Chalker: It does not. The legal status of the preamble is as I have already defined it. No doubt I shall do so again. The Single European Act does not represent what the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) suggested — a step towards a united states of Europe. My right hon. and learned Friend the Foreign Secretary told the House quite clearly on 23 April that we are not talking about the declaration or proclamation of a united states of Europe, or about vague political or legal goals. We are talking about practical steps towards the unity that is essential if Europe is to maintain and enhance its economic and political position in a harshly competitive world. I should have thought that some hon. Members would be pleased that, instead of the ill-defined notion of European union which had been discussed in the past, we now have a clear statement of what we are talking about. It is practical co-operation of the kind that we and our predecessors have always advocated. As far hack as 1961, the then Prime Minister, now Lord Stockton, told the House:


In this modern world the tendency towards larger groups of nations acting together in the common interest leads to greater unity and thus adds to our strength in the struggle for freedom.
I believe that it is both our duty and our interest to contribute towards that strength by securing the closest possible unity within Europe." — [Official Report, 31 July 1961; Vol. 645, c. 928.]
Those words were fully accepted by the House. They were backed up in 1966 by the then Prime Minister, now Lord Wilson, when he said:
We are talking about Britain's joining the Community and joining in the great drive towards European unity which I am now convinced more than ever is possible and within our grasp."—[Official Report, 8 May 1967; Vol. 746, c. 1093.]

Mr. Deakins: He did not tell the British people that.

Mrs. Chalker: That is what he said in the House, which is well reported. If that is not telling the British people—

Mr. Nicholas Budgen: It does not follow that, because someone has a certain job, his words are accepted.

Mrs. Chalker: It may not be accepted by my hon. Friend — I fully accept that—but it has been by hon. Members in debate after debate under Governments of both complexions.
A number of hon. Members have suggested that the new treaty text would oblige sterling to join the exchange rate mechanism of the EMS. That, too, is a misconception. Although the exchange rate mechanism has played a valuable role in helping participating countries with anti-inflationary policies, the United Kingdom has substantially reduced inflation while remaining outside the system. The Government have repeatedly made it clear that the question of membership is kept under review but the balance of economic arguments is not a simple one. No doubt, the decision will be taken by my right hon. Friend the Chancellor of the Exchequer. But that is not a matter for the moment. As my right hon. Friend the Prime Minister has said, at present there is no intention of joining. She did not rule it out. It may, at some stage in the future, be right that we should join that system.
My hon. Friend the Member for Southend, East (Mr. Taylor) was concerned about article 20 and what it meant. The article brings together the existing position in a formalised way. Any institutional change would require treaty amendment and the approval of this and every other national Parliament. My hon. Friend went on to ask about the proposed treaty amendments. They merely refer to existing arrangements and previous statements. They do no more than that. I genuinely do not believe that my hon. Friend's concerns are well founded. He wants to change provisions that the House of Commons decided many years gone by, in 1972 and in our debates since. My hon. Friend is simply seeking to turn back the clock on this decision made long ago.
We actively participate in the EMS and we have discussions on its future development. We deposit 20 per cent. of our gold and dollar reserves in the European monetary co-operation fund. That will not suddenly change. We support efforts to strengthen the EMS further, but we will not take the decisions about which my hon.

Friend the Member for Southend, East is concerned without a full and rigorous analysis of what is required for the best for this country. That is—

It being two hours after the House resolved itself into a Committee on the Bill, THE CHAIRMAN put the Question already proposed from the Chair.

Question put, That the amendment be made:

The Committee divided: Ayes 60, Noes 168.

Division No. 251]
[9.14 pm


AYES


Bennett, A. (Dent'n &amp; Red'sh)
McKay, Allen (Penistone)


Bermingham, Gerald
McKelvey, William


Bidwell, Sydney
McWilliam, John


Brown, Ron (E'burgh, Leith)
Marlow, Antony


Budgen, Nick
Martin, Michael


Callaghan, Jim (Heyw'd &amp; M)
Maxton, John


Canavan, Dennis
Maynard, Miss Joan


Clay, Robert
Michie, William


Cocks, Rt Hon M. (Bristol S)
Miller, Hal (B'grove)


Cohen, Harry
Nellist, David


Cook, Robin F. (Livingston)
Patchett, Terry


Davis, Terry (B'ham, H'ge H'I)
Pendry, Tom


Dixon, Donald
Pike, Peter


Dubs, Alfred
Powell, Rt Hon J. E.


du Cann, Rt Hon Sir Edward
Powell, Raymond (Ogmore)


Eastham, Ken
Prescott, John


Ewing, Harry
Raynsford, Nick


Field, Frank (Birkenhead)
Redmond, Martin


Foot, Rt Hon Michael
Robertson, George


Foster, Derek
Sheldon, Rt Hon R.


Foulkes, George
Shore, Rt Hon Peter


Fraser, J. (Norwood)
Skinner, Dennis


George, Bruce
Spearing, Nigel


Hamilton, James (M'well N)
Stewart, Rt Hon D. (W Isles)


Harrison, Rt Hon Walter
Taylor, Teddy (S'end E)


Haynes, Frank
Walker, Bill (T'side N)


Hogg, N. (C'nauld &amp; Kilsyth)
Wareing, Robert


Hoyle, Douglas
Welsh, Michael


Hughes, Dr Mark (Durham)



Kaufman, Rt Hon Gerald
Tellers for the Ayes:


Leighton, Ronald
Mr. Max Madden and


Lewis, Terence (Worsley)
Mr. Eric Deakins.


McDonald, Dr Oonagh





NOES


Adley, Robert
Clegg, Sir Walter


Alexander, Richard
Coombs, Simon


Amess, David
Cope, John


Ancram, Michael
Crouch, David


Ashby, David
Currie, Mrs Edwina


Atkinson, David (B'm'th E)
Dorrell, Stephen


Baker, Nicholas (Dorset N)
Douglas-Hamilton, Lord J.


Baldry, Tony
Dunn, Robert


Banks, Robert (Harrogate)
Durant, Tony


Batiste, Spencer
Dykes, Hugh


Bellingham, Henry
Eggar, Tim


Benyon, William
Eyre, Sir Reginald


Biggs-Davison, Sir John
Fallon, Michael


Blackburn, John
Favell, Anthony


Bonsor, Sir Nicholas
Fenner, Mrs Peggy


Boscawen, Hon Robert
Forman, Nigel


Bottomley, Peter
Forsyth, Michael (Stirling)


Bottomley, Mrs Virginia
Forth, Eric


Bowden, A. (Brighton K'to'n)
Fowler, Rt Hon Norman


Bowden, Gerald (Dulwich)
Fox, Sir Marcus


Boyson, Dr Rhodes
Franks, Cecil


Bright, Graham
Fraser, Peter (Angus East)


Brinton, Tim
Freeman, Roger


Bryan, Sir Paul
Gale, Roger


Burt, Alistair
Galley, Roy


Butler, Rt Hon Sir Adam
Gardiner, George (Reigate)


Butterfill, John
Garel-Jones, Tristan


Cash, William
Glyn, Dr Alan


Chalker, Mrs Lynda
Griffiths, Sir Eldon


Chapman, Sydney
Grist, Ian


Chope, Christopher
Grylls, Michael


Clarke, Rt Hon K. (Rushcliffe)
Gummer, Rt Hon John S






Hamilton, Hon A. (Epsom)
Oppenheim, Phillip


Hanley, Jeremy
Ottaway, Richard


Hannam, John
Page, Sir John (Harrow W)


Harris, David
Page, Richard (Herts SW)


Harvey, Robert
Percival, Rt Hon Sir Ian


Hawkins, C. (High Peak)
Portillo, Michael


Hawkins, Sir Paul (N'folk SW)
Powell, William (Corby)


Hayes, J.
Rhcdes James, Robert


Hayward, Robert
Rippon, Rt Hon Geoffrey


Heathcoat-Amory, David
Robinson, P. (Belfast E)


Heddle, John
Roe, Mrs Marion


Hickmet, Richard
Rowe, Andrew


Hicks, Robert
Rumbold, Mrs Angela


Hind. Kenneth
Sainsbury, Hon Timothy


Hogg, Hon Douglas (Gr'th'm)
Sayeed, Jonathan


Holland, Sir Philip (Gedling)
Shelton, William (Streatham)


Holt, Richard
Shepherd, Colin (Hereford)


Howarth, Alan (Stratf'd-on-A)
Shersby, Michael


Howell, Ralph (Norfolk, N)
Smith, Sir Dudley (Warwick)


Howells, Geraint
Smith, Tim (Beaconsfield)


Hunt, David (Wirral W)
Soames, Hon Nicholas


Hunter, Andrew
Speed, Keith


Hurd, Rt Hon Douglas
Spencer, Derek


Johnson Smith, Sir Geoffrey
Spicer, Jim (Dorset W)


Johnston, Sir Russell
Stanbrook, Ivor


Jones, Gwilym (Cardiff N)
Stern, Michael


Jones, Robert (Herts W)
Stevens, Lewis (Nuneaton)


Jopling, Rt Hon Michael
Stewart, Ian (Hertf'dshire N)


Kennedy, Charles
Taylor, John (Solihull)


Key, Robert
Temple-Morris, Peter


Kirkwood, Archy
Terlezki, Stefan


Knowles, Michael
Thompson, Donald (Calder V)


Knox, David
Thompson, Patrick (N'ich N)


Latham, Michael
Thurnham, Peter


Lawrence, Ivan
Tracey, Richard


Leigh, Edward (Gainsbor'gh)
Trippier, David


Lennox-Boyd, Hon Mark
Twinn, Dr Ian


Lester, Jim
van Straubenzee, Sir W.


Lilley, Peter
Wallace, James


Livsey, Richard
Waller, Gary


Lloyd, Sir Ian (Havant)
Ward, John


Lloyd, Peter (Fareham)
Wardle, C. (Bexhill)


MacKay, Andrew (Berkshire)
Warren, Kenneth


MacKay, John (Argyll &amp; Bute)
Watson, John


McNair-Wilson, P. (New F'st)
Watts, John


Major, John
Whitfield, John


Malone, Gerald
WilKinson, John


Maples, John
Wolfson, Mark


Mawhinney, Dr Brian
Wood, Timothy


Meyer, Sir Anthony
Yeo, Tim


Moynihan, Hon C.



Neale, Gerrard
Tellers for the Noes:


Needham, Richard
Mr. Michael Neubert and


Norris, Steven
Mr. Francis Maude.

Question accordingly negatived.

Mr. Teddy Taylor: I beg to move amendment No. 11 in page 1, line 13, after `Communities)', insert 'hut not paragraph 2 of revised Article 130R in Article 25 thereof.

The Temporary Chairman (Mr. James Lamond): With this it will be convenient to take amendment No. 21 in page 1, line 13, after `Communities)', insert
'but not Article 25 thereof'.

Mr. Taylor: The Minister, when replying to the last group of amendments, gave the impression, perhaps inadvertently, that she was replying to the speech that she thought I would make rather than the speech I actually made. For that reason I want to be absolutely precise about what I say on amendment No. 11.
This amendment relates to article 25 of the Single European Act which extends the competence of the Common Market to issues affecting the environment. Article 25 states what action would he taken and in which

areas, and certain principles are established as being acceptable for all member states. It further states when the Community would take action which it considers would be better administered at Community level than by individual member states.
Paragraph 2 of the article states:
Action by the Community relating to the environment shall be based on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source, and that the polluter should pay.
My first question to the Minister is whether it is now the policy of Her Majesty's Government that the polluter should pay. That is a simple and precise question. As the Government have agreed to this treaty, do they now take the view, as stated in the Act, that the polluter should pay?
I should like to know the answer because I am worried about my area of Essex and the enormous problems created for health and the environment by nitrate pollution of the public water supplies. We are all aware of the great concern that has been expressed both in the World Health Organisation and in the European Community about the possible dangers to health posed by nitrate pollution. The World Health Organisation has decided that a level of 50 ml per litre in the public water supplies is the maximum acceptable level. The Common Market has now made that a statutory level and states that all member states should insist on a 50 ml maximum in water supplies.
My understanding is that, until now, the Government have adopted the clear policy that the water consumer rather than the polluter should pay for the pollution. Various water authorities, including Anglian Water, have announced enormous capital programmes which are necessary to bring nitrate pollution down to the acceptable level. The Government have given exemptions on various grounds to some authorities for not bringing the nitrates down to the acceptable level. The fact is that water boards are spending a great deal of money simply to reduce the nitrate level in public water supplies.
We all know who causes the pollution. There is a great deal of natural pollution, but in the areas where there is a special problem the nitrate pollution comes directly from the activities of firms such as ICI which buy large expensive advertisements in the national press to tell us that nitrate fertilisers are good for the country. They are good in the sense that they greatly increase cereal production, but that is not particularly good when the Common Market is already having to spend £150 million every week for dumping surplus foods, largely cereals.
9.30 pm
Until now, my understanding has always been that while farmers create the pollution by putting nitrates into the public water supplies, it is the water consumer who pays to take them out. That has always seemed to be rather unjust but it is interesting that that was the Government's clear policy and, naturally, as a Conservative Member of Parliament I feel a general obligation at least to give some support to the views of my party. On the other hand, the Government now seem to be changing their policy because they have accepted the Single European Act which clearly states that the polluter should pay. I simply want to know whether the Government have changed their policy, and, if so, shall we now insist that the polluters should pay for the pollution that they create?
Secondly, as this is now legislation which can be interpreted by the European Court of Justice, once the


public water supplies have been privatised, which my right hon. Friend the Secretary of State for the Environment tells us will take place after the next election —presumably if there is a Conservative Government, although I am far from clear whether a Social Democrat controlled Government would support the privatisation of public water supplies—could a privatised water board now go to the European Court to demand that the cost of reducing nitrate pollution should be borne by the polluters?
So long as that is simply a policy, there is not much that one can do in relation to the European Court, but as this is now part of a treaty which can be interpreted by the European Court, would it be open to the privatised water boards, or, indeed, to aggrieved water ratepayers, to go to the European Court to insist that that policy as set out in paragraph 2 should be applied?
Finally, will my hon. Friend the Minister give us some idea of the latest estimate of the cost in capital and revenue to the water boards of reducing nitrate levels in accordance with the EEC directive? That is not one of those silly questions which people bring up because they want to make a fuss. We all know that nitrate pollution is serious. It has been identified by the World Health Organisation as a serious potential health hazard. We know that even in Britain our medical officers of health have to be advised if pollution goes above 50 ml per litre. We know that in Britain if nitrate pollution goes above 100 ml medical officers of health have to supply bottled water to babies to avoid their possible death. Therefore, it is a serious matter. Under this article there could be a complete change and I want to know how it will come about.
Paragraph 4 states that the Community shall take action where the objectives can be better attained at Community level than by individual member states. The EEC has already passed a nitrate regulation which says that no member state can permit, unless there is a special exemption, more than 50 ml. Therefore, it seems that the decision has already been taken by the EEC that this matter is better dealt with at Community level than by individual member states.
But for other issues, who decides what is better dealt with at Community level? Is it done by majority vote or by unanimity? I hope that the Minister can give me answers to those questions. They are important and could be significant not only for the Treasury and for water boards, but also for the water ratepayers and all those concerned with public health in our nation.

Mr. George Foulkes: I will not go into the detail that the hon. Member for Southend, East (Mr. Taylor) did, but I will talk about the general principle of whether new competences and powers should be given to the European Community and written into the powers of the Community. We believe that there should not be new competences and powers because in our view the existing competences and powers are not fully used by the Community. Because in some cases the powers are exercised de facto by the Community, it is suggested that they should be written in, but we do not understand why that is necessary. In certain areas, such as research and development and technology, co-operation does not need to be constrained by the institutional framework that the Community has. One notable example

that I gave earlier, to which I am sure the hon. Member for Tayside, North (Mr. Walker) will be referring, is the European airbus. We think that that kind of voluntary cooperation is better than forcing every country of the 12 to co-operate.
We are also concerned that, as de facto competences become legalised, there will be pressure for more competences, and this will lead to an escalation of the powers of the Community. In our view, further discussion is needed about the levels at which powers should be exercised, as the hon. Member for Southend, East said. One of the new levels at which certain powers will be exercised soon after the general election is the Scottish assembly.
Finally, we are concerned that one of the areas where it is proposed that these extra competences should be legalised is research and development, and here the British Government have been instrumental in making cuts in the budget. With regard to suggestions that there should be greater co-operation in research and development, for example, EUREKA and ESPRIT — I can never pronounce these acronyms properly because they do not really have a proper pronounciation, and I think that we should agree to have a free market in the pronounciation of acronyms—the Government have been instrumental in cutting the money available. Budget cuts have taken place to make way for the burgeoning expenditure in agriculture.
For all those reasons, we are against the extension of powers and competences and the legalisation of competences currently undertaken by the European Community.

Mr. Bill Walker: Article 25 is an important and serious one. As you will be aware, Mr. Lamond, the water authorities of Scotland are controlled by the regional councils. My hon. Friend the Member for Southend, East (Mr. Taylor) has properly asked the Minister how the polluter will be made to pay, and who will go to the trouble of finding out who the polluters are. When nitrates get into the public water supply, the source is usually farmers. As farmers, we are aware — I represent a very large agricultural constituency — that farmers using nitrates have been encouraged by the Government to introduce a voluntary code.
What happens when scares arise as a result of measurements laid down by Europeans was shown by what happened with the lambs. Problems, scaremongering, a lack of confidence and difficulties in agricultural communities were all created. Outside the areas affected directly, a lack of confidence was felt. When an area is judged to have problems, finding out who the polluters are presents enormous problems.
If we were leaving this even to some ghastly assembly that we shall never have in Edinburgh—

Mr. John Home Robertson: The hon. Gentleman will not be there.

Mr. Walker: I have no wish ever to be there, and I doubt whether either the hon. Gentleman or I will see it in our lifetimes. However, if we want to dwell on these flights of fancy, it is important to examine them. The important thing is, as I understod it, that under article 25, the European Community will be given powers. As a result, the new assembly, if it ever comes to pass, will not be able to do anything anyway. This is just a diversion.
This is a fundamental change to the way in which we have handled such problems, certainly in Scotland. I have never known farmers being harassed or brought before any European court on this matter. There was a problem of pollution in the local water supplies, and this has duly been resolved by a voluntary agreement. I do not have to remind my hon. Friend the Minister that water is an important ingredient of our most famous export, and without the water we would not have the famous export.

Mr. Foulkes: Haggis.

Mr. Walker: Haggis may be a famous export for Ayrshire, but that is not the case in the highlands of Scotland. The hon. Gentleman knows that my constituency is in the highlands of Scotland; therefore, I am talking about whisky.
There is an interest in matters affecting pollution and what it may do, but the important thing is whether we are prepared to give these extra powers to the Community, which will be further away from the source of pollution, which it may fail to understand. There is a worry, based on the recent experience of what happened with lambs, that we may he agreeing to a measure that will give us enormous confidence problems, and which would be better dealt with locally.

Sir Anthony Meyer: The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) had a terrible nightmare. He dreamt that he was addressing the House as a Socialist, arguing that matters of international cooperation are things with which Governments should not concern themselves, but should be left entirely to private enterprise, and that pollution was something best dealt with by national Governments. He woke up in the middle and found that he was making that speech.
It is a pleasure for once to find myself in complete agreement with my hon. Friend the Member for Southend, East (Mr. Taylor). and the powerful speech that he made arguing that article 25 of the treaty is essential if we are to have effective anti-pollution measures. It is legitimate to argue, as many hon. Members have, that there are a great many matters with which the European Community concerns itself that could be equally well dealt with by national Governments. However, one cannot possibly argue that about environmental pollution, which knows no frontiers.

Mr. Foulkes: Does that not equally apply to cooperation with countries in Scandinavia or eastern Europe, or with other non-member states of the Economic Community? I was talking about co-operation between countries on this issue and not necessarily restricting it to only 12 countries dealing with the problem. I am sure the hon. Gentleman agrees that environmental pollution does not stop at the boundaries of the European Community. The Norwegians and the Swedes are just as concerned as we are about acid rain and other pollutants.

Sir Anthony Meyer: I do not disagree for one minute with the hon. Gentleman, but if we say that we cannot cooperate effectively within the European Community, a fortiori we shall be unable to co-operate with countries outside it. The Community provides a basis for effective co-operation. If there is any field in which co-operation has to he made effective, it is precisely in the area of environmental pollution. Acid rain pollution of rivers and seas knows no national harriers and makes a mockery of

our claim to absolute national sovereignty and of all the piffle about being able to control everything completely from this Chamber. If there is any argument that is unanswerable, it is that which is based on this article. I do not see how anybody can possibly accept this amendment.

Mrs. Chalker: We have had an unusually speedy debate on this article and amendment No. 11, and I shall try to answer the concerns that rightly were expressed by my hon. Friend the Member for Southend, East (Mr. Taylor). I understand his anxieties. On 14 May 1986 he asked the Parliamentary Under-Secretary of State for the Environment, my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold), a question about nitrates. She said:
The polluter pays principle is not formally incorporated into United Kingdom law, although it is an aim of Government policy that the principle should be observed. This is reflected, for example, in parts of the Control of Pollution Act 1974. The Government also support the 1972 OECD and 1975 EC recommendations on the PPP,"—
the polluter pays principle—
but these are not legally binding; nor do they require payment where discharges are within the level acceptable to the control authority.
My hon. Friend went on to say in her answer that "nitrate enters public water supplies from a variety of sources".—[Official Report, 14 May 1986; Vol. 97, c. 490.] That is true. It is also true that nitrate builds up over a number of years. For that reason, we have not made the polluter pays principle an aim of Government policy and it is not formally included in United Kingdom law. The Bill will not change that policy.
Paragraph 2 of the proposed new article 130(R) refers to "action by the Community", not by individual member states.
My hon. Friend asked about the latest estimate of capital and revenue costs to the water boards of reducing nitrate levels in accordance with the EEC drinking water directive. We should want to do this, anyway, but this worthy item of public expenditure amounts to a capital cost of £50 million and a revenue cost of £5 million. However, the drinking water directive allows a derogation if there is no threat to public health. Such derogations would be issued only if they were based on medical advice.

Mr. J. Enoch Powell: Would it be convenient for the hon. Lady to deal at this point with a difficulty that exercises me and certain other right hon. and hon. Members? Effectively we are dealing with section 2(1) of the European Communities Act 1972. We are extending the treaties that are referred to in that section, which deals with the "rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties". What are the rights, etcetera, which will be added to those provisions by the inclusion of this provision which is the subject of the amendment? There must be some effect from the inclusion of this article in the new treaty which is being written into section 2 of the 1972 Act.

Mrs. Chalker: I have written down most carefully the point made by the right hon. Member for South Down (Mr. Powell), and I shall come to it in a moment. These general questions form the background to exactly the problems about which the right hon. Gentleman is anxious. There are principles enshrined in article 25, but they are no more than guidelines for the Council of


Ministers and they are included in the environmental action programmes which have so far guided Community action on the environment.
My hon. Friend the Member for Southend, East sought to find out if there was anything more than the guidelines to which we already adhere. It is quite clear that Community action on the environment is well established. As my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) said, pollution knows no boundaries. We have adopted numerous instruments, especially on water quality and atmospheric pollution, and we have used article 235 of the treaty of Rome to do that.
The new treaty articles, about which the right hon. Member for South Down spoke, bring the treaty of Rome up to date with practice and give a firm basis for the new Community measures. The right hon. Gentleman asked what rights would be added to the existing provisions. The principles that have been laid down are those which we already have in our domestic legislation. Preventive action is better than retrospective action, and action by the Community has to take account of the differing environmental conditions in the various regions. We may not all be equally affected by the way in which pollution travels.
We go further on pollution measures because we say that the potential costs as well as the benefits must be weighed up before action is taken. The Community should act only to the extent to which environmental objectives can be better attained at Community level than at the level of individual member states. That is exactly the policy we seek to follow.

Mr. Marlow: Does that mean that at no stage will the Community have any impact as to the quality of drinking water that comes out of taps in the United Kingdom?

Mrs. Chalker: It cannot. We have never tried to force on another country the principles that I have outlined. Unanimity applies here, and in that connection my hon. Friend the Member for Southend, East asked a question about paragraph 4 of article 130(R). Unanimity applies and if there were to be a proposition to set a certain figure with which Britain did not agree we would not have to accept it. I hope that answers the question asked by my hon. Friend the Member for Northampton, North (Mr. Marlow).

Mr. Marlow: In terms of article 130(R), would it be proper for the Commission to put such a proposal forward anyway?

Mrs. Chalker: Under the treaty, the Commission could put forward a proposal, but we are protected by the unanimity rule. The Commission is unlikely to do anything like that because we have worked in tandem with it as partners and it would not put forward something that other partners as well as ourselves were not prepared to have. If we were not prepared to have it, we would not accept it and our partners could do likewise and it would fall.

Mr. Teddy Taylor: The Minister is being helpful in giving us the answers to our questions. Is she saying that, apart from setting out some general principles, there is nothing in this at all? Does it mean that there is no way that a water board could use this if it thought that the

Government were not applying the polluter pays policy? Is this just a set of general principles which do not really help anyone in particular?

Mrs. Chalker: I shall come to my hon. Friend's point about the water boards in a moment. We have sought to make sure that we have sound principles for Community environmental action, if that is what is needed, because pollution knows no boundaries. We are after the best possible means of tackling the environmental problems. The acceptance of amendment No. 11 would change things, and I hope that hon. Members will realise that that is not necessary in following through the policy that has been adopted by the Government. Having listened to the speeches of hon. Members, I have concluded that they support our policy. Community action will be taken only when it is more appropriate than action at state level. The cost-benefit analysis has to be taken into account as well as scientific evidence and regional differences.
I am well aware that my hon. Friend the Member for Southend, East is anxious about the future of water boards. His anxiety is shared by many hon. Members and by many outside the House. My hon. Friend is anxious to know whether a water board will be prevented from improving its quality of supply. There is nothing in the article to prevent a board doing that. If my hon. Friend is anxious also, as I believe him to be, that a water board will feel that it is being asked to do too much, I remind him of the answer which my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold), the Under-Secretary of State for the Environment, gave him on 14 May. She spelt out clearly the principles that are applied. In general terms, the water board problem, if that is the appropriate term, relates to farmers.
My hon. Friend the Member for Tayside, North (Mr. Walker) has talked about farmers, and the principle that the polluter pays is being observed by farmers, who incur costs or lose revenue. They follow the requirements of the code of good agricultural practice so as to reduce the risk of nitrate pollution, which is one of the issues that is considered by the nitrate co-ordination group. That is something that will continue irrespective of article 130(R).
The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) asked about new competences. We are continuing with the principles that we have been following, but putting them together in a way which makes sense. The Community is involved only if a policy can be pursued more effectively at a Community level than by the individual state.

Mr. Foulkes: Will the Minister confirm which body will decide whether a policy is better pursued by the Community than by the individual country?

Mrs. Chalker: The Council of Ministers will decide, and by unanimity.
My hon. Friend the Member for Southend, East asked about privatised water boards and wanted to know specifically whether an aggrieved privatised water board or an aggrieved water ratepayer could go to the European Court and demand that the cost of reducing the nitrate pollution be borne by the polluters. That is excluded by second paragraph of article 130(R) of the treaty of Rome, which states,
Action by the Community relating to the environment shall
be based on the principle
that the polluter should pay.


Community action, therefore, should take account of this principle. If it does not, there will be the potential for a member state, or any of the institutions of the Community, to apply for judicial review by the European Court of Justice. The paragraph itself would not provide a basis for action by a national, meaning an individual, against the polluter. That was the essence of my hon. Friend's question.

Mr. Teddy Taylor: But I am disappointed.

Mrs. Chalker: I understand that my hon. Friend is disappointed, but perhaps we are talking about something that will apply in future. As an island, Britain is rather less affected than many of the mainland countries within Europe.
We would be ill advised to agree to the amendment. The polluter pays principle gives us a guideline. But because of time, as in the case of the filtration of nitrates through the soil, it may simply not be possible. Therefore, the principle is there, but the legal requirement is not in the Bill.
The hon. Member for Carrick, Cumnock and Doon Valley, strangely, got on to the subject of Community expenditure on research and development. I say "strangely'', because it did not quite fit in with other comments that have been made. He would be the first to complain if we allowed Community expenditure to rise without constraint and due consideration.
10 pm
It is not a question of cutting Community expenditure on research and development. The European Council agreed to a gradual increase in expenditure on research and development which is what happens under the new framework programme, about which my hon. Friend the Minister for Information Technology spoke last week. That new framework programme is under discussion and it will apply to research and development which relates

specifically to the implementation of ideas in a commercial manner. We want to ensure that we can get the best possible outcome in production and marketing.terms from the resources put into research and development, even if they start off at a basic level.

Mr. Marlow: On a point of order, Sir Paul. I expect I am wholly wrong, but is it not normal for the debate to conclude at 10 o'clock unless some other measures are taken?

The Second Deputy Chairman (Sir Paul Dean): I remind the Committee that in this case the 10 o'clock business motion does not apply because we are working on a guillotine motion which the House agreed some days ago.

Mrs. Chalker: I shall finish quickly, as my hon. Friend the Member for Northampton, North (Mr. Marlow) is obviously anxious that I should. I was seeking to answer questions raised during the debate.
My hon. Friend the Member for Tayside, North seemed to think that there was a fundamental change in our approach. I hope that what I have said makes it clear that there is no fundamental change. I have already answered the questions about farmers being forced to pay.
It is important that we should work together to reduce pollution, as we are doing, and that we should take on at Community level only those matters which know no boundaries. We should certainly act, as indeed we are, to reduce pollution where it occurs within each member state. I ask the House to reject the amendment.

Mr. Teddy Taylor: As there is obviously nothing in this particular article and as it does not do any good to any-one but simply sets out a pile of general principles, if the House is agreeable, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

European Communities (Amendment) Bill

Mr. Deakins: I beg to move amendment No. 14, in clause 1, page 1, line 13, after `Communities)', insert 'but not Article 10 thereor.
The amendment deals with the increased powers to be conferred on the Commission by the Council. It deals with article 10 of the Single European Act and relates to an amendment to article 145 of the treaty of Rome. The important point about article 10 is that it imposes a duty on the Council to confer extra powers on the Commission which are not at present mentioned in article 145 of the basic treaty.
The Commission's powers are at present laid down in articles 155 to 162 of the treaty of Rome. I draw the Committee's attention particularly to articles 155 and 162 which make it perfectly clear that the Commission is basically a bureaucratic body — I do not say that pejoratively—which is the servant of the Council but nevertheless has rights and can take initiatives to put proposals to the Council on any matters arising from the treaties.
If that were all I knew about the Commission, perhaps I would not be moving the amendment tonight. In 1985 the Commission started getting rather big for its boots. The House will recall that at the time of the agricultural price review the West German Government imposed a veto under the Luxembourg compromise on a fall in cereal prices. The outcome—I use the words of the Minister's predecessor—was as follows:
The Commission has said that in the absence of an agreement on cereal prices it is taking certain administrative actions on the basis of a 1·8 per cent. reduction in cereal prices. Those proposals could be changed if a decision is reached by the Council of Ministers on a different level of reduction." — [Official Report, 20 June 1985; Vol. 81, c. 467.]
The important point is that the Commission, the servant of the Council, was arrogating to itself, for the first time since 1957, the power to overrule a national veto in the Council of Ministers. It did overrule that veto and there was not a peep out of any of the national Governments, including our own. In my opinion, it exercised that power illegally and, had the British Government had the guts to take the Commission to the European Court, I am fairly certain that the European Court would have ruled against the Commission overturning that Council decision because, if the Council fails to reach a decision the previous year's prices should have applied.
There are those in the European Community—I refer especially to the Dooge committee — who wish to increase the powers of the Commission. That was one of the recommendations in the Dooge committee report last year. Reservation was, of course, expressed on behalf of the British Government, but I wish to prove to the Committee that there are moves in Europe and in the Commission to give the Commission a much more executive power than at present. The new article 10 in the Single European Act will be doing that very thing.
I call in aid the House of Lords. In its important report on European union, HL 149, which was the 12th report of 1985–86 from its Committee on the European Communities, it states in paragraph 10 under the heading "Delegation to the Commission":

There is an express provision (Article 10) for delegating to the Commission powers to implement policies settled by the Council".
It goes on to say in paragraph 16:
The powers of the Commission in relation to the drafting of legislation are already significant and will become more so.
It went on to explain why they would become "more so". The additional power under article 145 of the treaty of Rome, as amended by article 10 of the Single European Act, will confer more powers on the Commission. Should we not be concerned about that because the role and constitution of the Commission are already laid down in the treaty and, as I have already said and I hope proved to the Committee, it is already trying to exceed those powers? Here is the Council, and possibly the House, seeking to give extra powers to the Commission.

Sir Russell Johnston: Does the hon. Gentleman not think that the fact that the Commission is of mixed nationality and of mixed political opinion and is extremely transparent in the examination of any proposals means that it is not a body to fear in these times and it is certainly to be feared much less than some of the bureacracies in our nation states?

Mr. Deakins: I do not think that the hon. Gentleman would expect me to agree with that. We are in total opposition on these matters. His view of the progress in the European Community differs from mine. I am not sure what his views are on federalism and a single European Government, which is the alternative to federalism. Additional power for the Commission is one of the mechanisms which will be used by the federalists in the Community.
Even our own Government have some doubts about what is involved, although they have agreed the Single European Act and are bringing this provision before us tonight. In the explanatory memorandum published by the Foreign Office earlier this year under the heading "Policy Implications" it states in paragraph 8:
If the Commission's proposal were adopted as drafted it would mean that, where the Council confers implementing powers on the Commission, the Commission would be operating within a range of implementing rules"—
I emphasise the next words
which would give it potentially greater responsibility than at present.
It is very important for the Committee to note that.
The Commission is a federal type body. It is federalist in everything that it seeks to do along with the other institutions of the European Community other than the Council of Ministers. We are giving it more power in other parts of the Single European Act to work with the Assembly to overturn or influence much more than in the past legislative decisions by the Council of Ministers under the new co-operation procedure. Therefore, it is ill-advised for the Committee, the House and the Government to agree to give it extra powers as suggested in the article.

Mr. Marlow: I shall be incredibly brief.
Article 10 says that the Council of Ministers can
confer on the Commission … powers for the implementation of the rules which the Council lays down.
If the Council wished to at a later stage, would it be able to withdraw those powers from the Commission?

Mrs. Chalker: In this short debate, the hon. Member for Walthamstow (Mr. Deakins) has made several


interesting points, but he has misunderstood the management powers of the Commission, to which I shall refer. First, let me lay down the general principles.
In deciding Community legislation, the Council lays down a policy framework, and in most cases the manner in which the legislation is to be implemented by the Commission. What has always happened is that implementing powers are delegated to the Commission so that the Community functions under the guidance of the Council, but more efficiently. The Council could not possibly take every routine, day-to-day management decision or the very detailed decisions on technical matters. For that there must be technical advice.
Therefore, the Council has conferred implementing powers on the Commission in areas such as Customs administration, agriculture management, and the adaptation of standards to accommodate technical progress. In each case that is subject to the safeguard that the Commission has to consult a specialised committee of national experts on each of the measures that it wants to take, so that decisions of general importance and contentious issues are always referred back to the Council. That is where the hon. Member for Walthamstow became concerned about what he said had happened in 1985, regarding the Commission's management powers, in this case, in agriculture.
What happened was not that the Commission exercised an illegal power to overturn a Council decision. The Council was not able to agree on a price reduction for cereals. There was not a price reduction because it could not agree. The Commission made use of its management responsibilities—which it had already been given by the Council of Ministers — over its arrangements for intervention, so that the quantities of cereals being sold into intervention were controlled. Therefore, savings were achieved that I should have thought that the House would welcome. They counterbalanced the price reduction that had not been secured—or at least they did so in part.
The management powers that are conferred on the Commission by the Council of Ministers carry on as they were already under the treaty of Rome. I can assure the hon. Gentleman that the Commission's powers in that area are not changed by the Single European Act. What has happened up to now, and what will no doubt have been clear to some hon. Members—

It being one hour after commencement of proceedings on the motion, THE SECOND DEPUTY CHAIRMANproceeded, pursuant to the Order [1 July], to put forthwith the Question already proposed from the Chair.

Amendment negatived.

Mr. Teddy Taylor: I beg to move amendment No. 47, in page I, line 13, after `Communities)', insert
'but not Article 130D in Article 23 thereof'
I appeal to the Minister to accept the amendment. I am sure that, on reflection, she would agree that it would improve the EEC. Article 130D calls on the Commission to produce comprehensive proposals to amend structurally the rules and operation of the agricultural funds, the social funds, the regional funds and the guarantee funds in such a way as to make them more conducive to helping the various disparities between regions and the backwardness of the least favoured regions.
10.15 pm
In short, under the article, we are telling the Commission to concentrate on changing all the rules of all

the funds within one year and that the Council must agree. I hope that the Minister will accept that, instead of the Commission spending time doing that, it should concentrate on bringing forward reforms to the basic structure of the common agricultural policy. We all know that the common agricultural policy is undoubtedly the EEC's greatest failure. About 70 per cent. of total Common Market spending is devoted to agriculture. Over 50 per cent. of every penny spent by the Common Market is devoted to the storage and disposal of surpluses.
Last Thursday, I was told by the Minister of State, Ministry of Agriculture, Fisheries and Food, that over the past 12 months the Common Market has spent £7,300 million on the storage, dumping and destruction of food. That is a huge amount. There are clear signs that the figure will rise sharply as a result of the decisions made by the Council of Ministers and by the European Assembly today. It will rise because nothing has been done to reduce surpluses, except the milk quotas which simply gave cash to farmers to abandon milk so that they could produce other food already in surplus, such as beef.
Exports to the Soiet Union have soared by about 1,100 per cent. since the Conservative party came to office. Export prices have plunged, with beef at 15p a pound, butter at lop a pound, and wine at 4·5p a litre. The surpluses have become so great that the Commission is bringing in crazy new plans such as its £200 million plan to subsidise the feeding of cows with butter.
That is the crisis and the problem of the Community. I do not think that even the EEC's greatest supporters would defend the CAP in its present form. I am in no doubt that the Commission and the Council will be deflected from their important task if we allow article 130D to remain.

Mr. George Robertson: This is an important amendment. However, that does not imply that the Opposition will vote for it. It will be interesting to hear the Minister's views on it. The hon. Member for Southend, East (Mr. Taylor) raised one element in the wide subject. The title of the article is "Economic and Social Cohesion". I do not know why the Economic Community must deal in such a strangulated vocabulary which is unintelligible to anybody who wishes to understand it. "Cohesion" means social and regional policy within the Community.
The Government have chosen to exclude certain parts of the Single European Act, most notably those relating to European foreign policy co-operation. However, they have chosen to introduce into the Bill that title and all that goes with it.
The amendment concerns article 130D. The objectives of article 130D are directed to article 130A, which states:
In order to promote its overall harmonious development, the Community shall develop and pursue its actions leading to the strengthening of its economic and social cohesion.
Most importantly, the article continues:
In particular the Community shall aim at reducing disparities between the various regions and the backwardness of the least-favoured regions"—
presumably, in the Community.
Article 130D, which is the concern of the amendment, states:
Once the Single European Act enters into force, the Commission shall submit a comprehensive proposal to the Council, the purpose of which will be to make such amendments to the structure and operational rules of the existing structural Funds … as are necessary to clarify and


rationalize their tasks in order to contribute to the achievement of the objectives set out in Article 130A and Article 130C".
I am sorry if I am confusing hon. Members with this gobbledegook, but that is the way in which the Government have chosen to present this bizarre and Byzantine legislation. Article 130C states:
The European Regional Development Fund is intended to help redress the principal regional imbalances in the Community through participating in the development and structural adjustment of regions whose development is lagging behind and in the conversion of declining industrial regions.
Those are the fine and grand objectives of title V of the Single European Act.
In stark contrast to those objectives, which presumably the Minister will defend with considerable vigour, is the fact that the Government do not believe in that aim. They do not want to. At every opportunity to vote in the European Council — at meetings of the Finance Ministers Council and of the Foreign Affairs Council—they voted against it. Earlier today, hon. Members debated the 1986 European Communities budget. Last November, when Finance Ministers fixed the budget for 1986, the United Kingdom Government voted against increases in the social and regional funds which would have made them slightly more effective than they are at present in the Community as a whole. At present, their effectiveness is tiny. That example showed how the Community and the Government could have lived up to the hopeful expectations of the rhetoric in title V of the Single European Act. Far from endorsing and supporting it, the British Government chose to vote against it.
I see no purpose in the Government endorsing these objectives if they are not willing to do anything about them. This country is being doubly penalised under the present regime. The Government's restructuring of regional policy means that fewer areas are even considered for help through the regional fund.

Sir Russell Johnston: I do not want to interrupt the flow of the hon. Gentleman's argument, but surely he will remember that, in the earlier debate the critics of the European Community said, "By gosh, we do all this regional stuff ourselves. We would do it far better under the present Conservative Government than any European organisation could."

Mr. Robertson: The hon. Gentleman should not believe that the critics of the Bill and of the European Communities' finances are ever at one in respect to most of the objectives. There is a clear-cut division between the critics on the two sides of the Chamber on the regional and social funds.
I want merely to point out the contradictions in the Government's thinking. They are amply illustrated by this part of the Single European Act. The Government have turned their backs on regional policy, at home and in the European Community. They have consistently voted against giving it proper and adequate funds to do the jobs that they say are necessary. But they now come forward and say to the House of Commons that it should endorse a section of the Single European Act that underlines the commitment towards social and economic cohesion. They now say that the Commission should come forward with new rules to make cohesion easier.
We know that today the Minister of State, Treasury will have been involved in decisions on the European budget which will cut to the very minimum possible the amounts of money available in the budget to do something about eliminating the disparities between the regions. At the same time, that same Minister will have ensured that the existing lunacies in the CAP, which eat up more and more of the funds and make less and less sense of regional policy, are increased, despite the fact that, on every other front, the Government say that they agree with the fight against this nonsense. I hope that the Minister will be able to persuade the House in her reply that there is some intelligence behind this proposal.
Perhaps, with the adoption of the Single European Act, we might see the Government starting to believe in those tiny elements within the Act which might make more sense for the Community and for this country. However, I have a feeling of despair borne of experience in other areas, that we are likely to see the rhetoric backed up by nothing more than cynical self-interest which the Government show for their own policies.

Mr. David Heathcoat-Amory: I rise for the first time during these Committee proceedings to support briefly the amendment proposed by my hon. Friend the Member for Southend, East (Mr. Taylor). The amendment seeks to leave out article 130D and I support it because I would hate to see such a vacuous and feeble clause pass into English law. As it stands, the clause seeks to clarify and rationalise the structural funds and in particular the agricultural fund.
The word "rationalise" does not mean very much. That is perhaps appropriate, because the Treaty is littered with phrases which are vague and imprecise and aims which are unquantified. If reform of the CAP is to be mentioned in the treaty and in the Act, stronger language is required about a fund which is gobbling up more than 70 per cent. of the European budget and which is still increasing.
The Committee does not know the final figures and we hope that a statement will be forthcoming soon. Newspaper reports state that the new budget, as agreed between the Council and the Assembly, might increase farm spending by £700 million. That is an increase over the Assembly budget which was declared illegal because it was an increase over the Council budget which in turn the British Government voted against last December because it threatened budget discipline.
These serious matters were debated earlier this evening. The only remedy suggested in article 130D is to clarify and rationalise. Article 130D contains a rather coy reference to money and that is almost the only reference to money in the Single European Act. Article 130D refers to the need for the funds to,
increase their efficiency and to co-ordinate their activities between themselves and with the operations of the existing financial instruments.
I do not know what that means. Perhaps something was lost in the translation.

Mr. Teddy Taylor: I believe that the words "existing financial instruments" convey the impression—at least they do to me and I am sure that they do to others— that the structure should be left alone and untouched.

Mr. Heathcoat-Amory: I do not doubt that my hon. Friend is correct. We are not told what the existing financial instruments are. However, I would suggest to the


Committee that that might be an oblique reference to the 1984 Fontainebleau agreement. That agreement laid down specific procedures for financial discipline and for dealing with agricultural spending. If anything was to be included in the Bill, why are the specific procedures promised to the House at the time of the Fontainebleau agreement not included? The agreement states that it is,
essential that the rigorous rules which at present govern budgetary policy in each Member State shall also apply to the budget of the Communities, and that the level of expenditure will be fixed on the basis of available revenue, and that budgetary discipline will apply to all budgetary expenditure.
Why were these words not included in the Bill? It was on the basis of these words and the agreement that the House agreed to raise our VAT contribution from 1 per cent. to 1—4 per cent.
Although budgetary discipline has turned out be a somewhat empty phrase as predicted, I believe that the agreement is still in force.
It is incredible that an Act which purports to suggest ways to reform the CAP should not refer to that pledge made two years ago not just to this House but to each member state.
10.30 pm
A list of declarations appears at the back of the Act. Made by member states and organisations in Europe, those declarations elaborate on various provisions in the Act. There appear declarations by Greece, Ireland, Portugal, Denmark and by the Commission. The Commission's declaration, the meaning of which I find it difficult to follow, says:
the Commission consider that the provisions inserted in the EEC Treaty with reference to the Community's monetary capacity arc without prejudice to the possibility of further developments within the framework of the existing powers.
I think that means that the political aims of the Commission should not be hampered by lack of money. If the Commission could insert its interpretation of the Single European Act, why were the British Government not able to include their declaration containing reservations about the provisions, at least drawing the attention of the European institutions to that solemn agreement into which we entered after the Fontainbleu summit?
Why did we allow the provisions to be drafted in such an opaque form, and why did we decide not to make a declaration? Had we done the latter, we should at least have kept alight the flame of budgetary and financial discipline that we took to be a fact when we agreed months ago to increase our VAT contribution.

Mr. Bill Walker: I, too, support the amendment, not only for the reasons that my hon. Friends have advanced but because I represent a constituency with a huge agricultural interest. If we approve the provision as drafted, we shall continue as at present, with all the uncertainties that exist in the system, including the horse trading that goes on every year on agricultural policies and farming support.
That produces a great deal of unnecessary aggravation, simply because we are unable properly to come to terms with the difficulties. My hon. Friends and I shall continue to get aggravation from NFU members and hear about their ever-increasing disenchantment with the system. [Interruption.] They are not disenchanted with me, because they know my position in these matters.

Sir Russell Johnston: Did the hon. Gentleman suffer no aggravation under the old annual price review system?

Mr. Walker: The hon. Gentleman is talking of a scheme under which support came from the United Kingdom Parliament. The aggravation then was considerably less than it has been in the last three years. Under the old scheme farmers were not faced with surpluses for which they were not compensated, with the cost of keeping surpluses in store and with anxieties about the ways in which those surpluses are disposed of. The farmers feel strongly about that; if the hon. Gentleman's farmers do not feel that way, they must differ from those in my constituency. My farmers feel strongly that they are blamed for what they did not create. They are the victims of what has been created by Europe. They were encouraged to do certain things. I would go further and say that they were bribed to do certain things, on a scale that brings them considerable odium today. That is my concern.
The farmers responded to requests to produce more and more and to get into cereals and produce them in vast quantities. They were encouraged to get into milk production and do what they could. They responded and they are being blamed for it now. The article will continue to bring blame upon the farmers for something that properly is the responsibility of the European Community.

Mr. Butterfill: I cannot really agree with my hon. Friend the Member for Wells (Mr. Heathcoat-Amory) that the article is opaque in any way. It seems clear In its objectives, and I am surprised that there should be muddle about that.
The article says that it will review the operation of all these farms so that they may contribute more effectively to the achievement of the objectives in articles 130A and 130C. To remind the House of those articles, they want to reduce the disparities between the regions and reduce the backwardness of the least favoured regions. The articles want to redress the regional imbalances in the Community and assist those areas that are lagging behind as well as assisting the industrial regions. I should have thought that hon. Members on all sides of the Committee would share those objectives.
Perhaps one of the great criticisms of the Community is that it has not achieved these objectives, and, indeed has signally failed to achieve them.
The different Community funds that are described in the article have been often pulling in opposing directions in their operation.
The article tells the Commission that it must come forward with proposals to rectify the problem and ensure that the funds will operate for the benefit of the Community in the way that is clearly spelled out in articles 130A and 130C. I cannot see any reason why all hon. Members should not support the inclusion of article 130D.

Mrs. Chalker: I shall say a few words about the 1986 budget at the beginning of my reply to this debate on amendment No. 37, as several hon. Members have mentioned that. The budget has been approved by the Budget Council and Committee, and by a final vote in the plenary session of the European Parliament this afternoon.
Let me say what this is, because it will help to explain to my hon. Friend the Member for Wells (Mr. Heathcoat-Amory) why we did not write in a declaration about


budgetary discipline or the Fontainebleau agreement. My hon. Friend was seeking to put that question, although he used slightly different words.
We have established the new 1986 budget within our resources ceiling. While the VAT rate for other member States will be 1·4 per cent. it will be lower for the United Kingdom at only 0·68 per cent. because of the increase in our abatement. The revisions to the budget will be of great financial benefit to the United Kingdom. There is extra provision for our abatement in addition to the £900 million that we are receiving in respect of 1985. That was the value of the Fontainebleau mechanism that I think my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) was referring to earlier today.
The United Kingdom is a beneficiary of the extra provision of payments from the social fund. If I may now turn to something that has been said by other hon. Members in respect of the amendment I will then come back to the questions that were asked.
This debate is about cohesion, and that includes that part of the common agricultural policy which is part of the structural funds and thereby part of the Single European Act. That is known as FEOGA guidance, and it is the fund for agricultural restructuring. That is a very small proportion of the total CAP budget—around 5 per cent. It is in that sphere that the debate tonight should be concentrated, not on the 95 per cent. which is not part of the structural funds and, as my hon. Friend the Member for Southend, East (Mr. Taylor) said, that is where large amounts of the money go.
If I may deal with what the hon. Member for Hamilton (Mr. Robertson) said in his remarks—and he was quite wrong in what he said — the benefits to this country from the funds are not being cut in this budget; in fact, we are doing well. The position is that in regard to the regional and social funds—and particularly the social fund, from which we are major beneficiaries—there is an increase in the budget that has just been adopted for the benefit of this country. In total, since 1981 I estimate that we have had about £2·7 billion from the funds. Therefore, the budget to which I referred at the beginning is a success for the country. We will benefit from it, we are getting an increase in our abatement and we shall continue at a lower rate of VAT than before.
That is why I say, with regard to the remarks of the hon. Gentleman about the structural fund with which we are concerned tonight, and the articles before us in consideration of amendment No. 47, that the budget from that point of view is a good budget. I turn now to the clarification sought by my hon. Friend.

Mr. George Robertson: Will all the fairness that she is renowned for, does the Minister not accept that it is outrageous that we are having this debate, as we had the last debate, with the House of Commons not even knowing what is in the budget that she is now parading before us? Perhaps tomorrow because we understand that tomorrow there might be a statement—we shall be in possession of the information to confirm or deny what the Minister said about these funds in that budget. Is there not something fundamentally wrong about that? If the hon. Lady were on the Opposition side of the House, or even on the Tory Back Benches, she would surely create

an outcry about that. She knows what budget was agreed in the early hours of this morning, but the House of Commons of this country does not know.

Mrs. Chalker: The budget has been a matter of debate in the House over several months. A decision has to be reached by the Council of Ministers, and I agree that this happened in the early hours, although it was on Tuesday morning, and it has, indeed, been reported in the press. I know the point that the hon. Gentleman is making. It is that it has not yet been reported to the House.
I did not feel that it was right to discuss that part of the common agricultural policy, in other words, the structural fund part of the CAP, without mentioning what some of my hon. Friends had been asking for. I do not seek to preempt my right hon. Friend's statement to the House, if he is to make one tomorrow. What I seek to do is to put in context the amendment that we are debating tonight.

Mr. Budgen: With reference to the rebate, I have just obtained a copy of tomorrow's Financial Times. There is a very interesting article on the back page which says that underlying all the discussions about the budget was the resentment that was felt by many other states against Britain's rebate. It is suggested that in the 1987 budget it might well be that some renegotiation disadvantageous to this country will occur concerning the rebate. I hope that my hon. Friend will not suggest that the rebate is there set in concrete.

Mrs. Chalker: As my hon. Friend has been able to leave the Chamber to obtain a copy of the Financial Times, he obviously has an advantage over me. Whatever is speculated about the future in the Financial Times—an excellent newspaper — does not affect what has been decided and agreed today in the 1986 budget. That is what we are concerned with this year, and we shall be facing considerable discussions about the 1987 budget. It still remains the case that the agreement that we made in Fontainebleau in 1984 stands, as does our abatement.
10.45 pm
My hon. Friend the Member for Wells asked about the lack of a declaration about budgetary discipline at the back of the Single European Act. There is a short answer and a long answer. I shall give him the short answer because of lack of time. There was no need to do so. The Fontainebleau abatement mechanism is already enshrined in Community law, and the budget discipline is unaffected by the Single European Act. The declarations in the Act are about issues raised in the changes to the treaty. As these issues are not raised by changes to the treaty, there is no sense in writing them in.

Mr. Heathcoat-Amory: Is my hon. Friend saying that budgetary discipline and the procedures laid down in the Fontainebleau agreement have been adhered to in the latest budget, which will be presented to the House

Mrs. Chalker: Yes, I am saying that they have already been adhered to, because the Fontainebleau mechanism is already enshrined in Community law. The budget discipline is unaffected by the Single European Act, and as been taken into account by my hon. Friend the Minister of State, Treasury in deciding the 1986 budget.
My hon. Friend the Member for Wells asked a further question about amendment No. 47. Article 130D is in article 23 of the Single European Act to bring about a clarification and a rationalisation of the tasks of the


structural funds. If we are to use this money, we want to use it in the most effective and efficient way. We want to have a cc-ordination of activities where that will be of benefit.
The size of the structural funds will be determined under existing rules. The Bill will cut down duplication of effort, and ensure that the European taxpayer get better value for money out of the operation of the funds. Some of what has been said in the debate has ranged wider than article 130 and its various parts. That is why I said that the guidance section of the CAP on which we should be focusing is part of the structural funds and that it promotes objectives such as farm modernisation.
The well-known problems have their roots in the guarantee section, which pays for the market support mechanisms under various commodity regimes. All of that is completely outside the scope of amendment No. 47. It may be interesting, but it is not what we have before us.
The Government put very high priority on the reform of the CAP. The problems of agricultural oversupply are growing, not just in Europe but worldwide. The Community needs to pursue reforms and not only within itself. The enormous oversupply internationally needs to be pursued through GATT, OECD, bilaterally with major producers, and internally through the continuing reform of the CAP to ensure
that it is better adjusted to the market situation with the result that the share of public expenditure claimed by agriculture can be reduced.
Those are not my words. They are words taken from the European Council meeting at The Hague, upon which my right hon. Friend the Prime Minister reported only 10 days or so ago. There is no simple solution. It is a global problem. [Interruption] The hon. Member for Hamilton laughs at this. The Community's cereals surplus of 17 million tonnes is very large, but it is dwarfed by the United States cereals surplus of 80 million tonnes. Equally, it is wrong to pretend that left to ourselves we could either avoid or solve the problem. It is a world problem.
My hon. Friend the Member for Southend, East is worried about trade discussions between the United States and the Community. He believes that the world must solve the problem of food surpluses because the money that is wasted on storing surpluses could be better used. That is exactly what this Government are trying to do. That is why this year's price fixing is a positive step in the right direction.
We have included measures to curb cereal production and we have agreed to reduce dairy quotas. We hope that there will be an agreement on beef before the end of our presidency, and before the end of this year the reform packages will be seen to be working. The Commission estimates that measures that have been in place since 1984, including milk quotas, saved 1 billion ecu in 1984 and almost 3 billion ecu in 1985 and that they will save 4 billion ecu this year. That is not to be sneezed at. We shall build upon those savings.
In 1979 the common agricultural policy accounted for 75 per cent. of the budget. Today it accounts for 65 per cent. of the budget. We are determined that this downward trend shall continue. It will allow us to use the structural funds more efficiently. That is exactly what is covered by article 130D in title V of the Single European Act.
The amendment would not assist. It would lead us in the other direction. It would not clarify the use to which the structural funds can be put and it would not mean that

the European taxpayer, which means the British taxpayer, would enjoy better value for money from the operation of the funds. I ask the Committee to reject the amendment.

Mr. Teddy Taylor: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. J. Enoch Powell: I beg to move amendment No. 22, in page 1, line 15, leave out 'the preamble and '.
In the course of these proceedings, it is useful occasionally to remind ourselves why we have the Bill at all. We have the Bill at all because it is necessary to have legislation in order that the Government may become a party to the treaty that they have made. In order to make that possible, effect has to be given in United Kingdom law to the consequencies of the new treaty. Therefore, we are thrown back upon the basic document, the European Communities Act 1972, which gave direct effect in the law of the United Kingdom to rights, et cetera, arising out of the treaties as they existed at that time.
We are now writing, as it were, into the 1972 Act parts of the Single European Act, namely those parts which may give rise to new rights, powers, liabilities, et cetera, that will have a direct effect on the law of the United Kingdom.
The Government, presumably not accidentally, have included the preambles to the Single European Act among the treaty provisions which are to be written into the 1972 Act. Therefore, they must believe that, under the preambles as opposed to the other provisions of the Single European Act, there may be new rights, powers and liabilities which will directly take effect in the law of the United Kingdom if provision is made to that effect by the Bill.
The Minister and other hon. Members have treated lightly the significance of the preambles. Indeed, they are large and their content is nebulous, but that creates an even more difficult problem: how such large and nebulous expressions of aspiration — expressions which the Minister said are by no means new — can create new rights, powers and liabilities, taking effect directly.
The purpose of the amendment is to seek from the Government a clear statement of the way in which the preambles as opposed to the articles of the treaty will create the new powers which will take direct effect in the United Kingdom. If there were no such consequences of the preambles, they would not be included in the text of the Bill. The amendment seeks clarification from the Government of the consequence of the preambles. They cannot be purely inert. They cannot be purely declaratory. They cannot be purely a restatement of what already exists, or they would not be mentioned in the Bill.

Mr. Deakins: The Government cannot feel strongly about the amendment, since only last year the Prime Minister told us that no treaty amendments were necessary. Had no treaty amendments been necessary, except for those which allow British to move towards the completion of the internal market, there would have been no Bill before the House, no preamble and none of these commitments.
My speech will relate to the commitment to European union. In the 1967 White Paper published by the Labour Government the words "European union" do not appear. In the 1971 White Paper, the following statement appears:
The Community is no federation of provinces or counties. It constitutes a Community of great and established nations,


each with its own personality and traditions. The practical working of the Community accordingly reflects the reality that sovereign Governments are represented round the table … There is no question of any erosion of essential national sovereignty.
There is no mention of European union in that White
There was then the series of summit meetings, starting with Paris in 1972 and moving on to Copenhagen and other places, which developed the concept of European union. The then Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath), fudged the issue and was extremely evasive in a statement to the House on 23 October 1972, when he said:
Our concept of a European union is the same that this country has always had"—
I query the words "always had"—
which is that in developing institutions one develops them to meet the needs of the organisations concerned." — [Official Report, 23 October 1972; Vol 843, c. 796.]
The Minister used similar words in reply to a debate earlier this evening, so that will obviously be the theme of her reply to this debate.
Even the Foreign Office, federalists though most of its occupants are, has recognised the need to define the term "European union", which was supposed to have been defined in 1972 and 1973. In the middle of 1973, the then Foreign Secretary, now Lord Home, was asked about this by me and by the right hon. Member for South Down (Mr. Powell), who then represented Wolverhampton, South-West. He said:
Our objective of political union has been declared. For the foreseeable future it must be the nine countries working independently but achieving as great a consensus as they can." —[Official Report, 25 July 1973; Vol. 860, c. 1607.]
11 pm
That is almost harmless, one would have thought, but the Foreign Secretary, in a memorandum to the House of Lords Select Committee on the European Community:
"European Union" HL 149, a report from which I quoted earlier, said in quoting from a 1972 communiqué:
The Heads of State and Government decided to speed up the work required to define the European Union".
I stress to the Minister that that was from a 1972 communique and we still do not have an agreed definition by the member states of the EEC about European union. That Foreign Office memorandum went on to say:
Part of the difficulty in considering European Union is that the term has never been satisfactorily defined.
We are entitled to query what the term means. The Minister told us what the Government think it means, but we need to know what the Community thinks it means. That is the important thing. It is not what Ministers tell us that counts; it is what is going on in the Community.

Mr. Spearing: Has my hon. Friend seen the agreement signed by Foreign Ministers at the time of the European Common Act? That Act is not before the Committee and
is not in the Bill and it gives substance to the Stuttgart declaration. Is not that the nearest honest meaning of European union, something upon which the Government have been completely silent?

Mr. Deakins: We have not heard anything from the Minister about that, but of course the Stuttgart declaration is being embodied in our legislation. That is called the solemn declaration. One wonders at the stupidity of that. Perhaps the Ministers were drunk at the time and had had a good meal.

Mr. Jeremy Hanley: Withdraw.

Mr. Deakins: No. I am talking about Ministers generally over there. A former Minister here told us that the best agreements were reached over pheasant and port wine and things like that.
Even the Governments of the EEC could not satisfactorily define European union in the Stuttgart declaration. They called for a review after five years, preparatory to setting out a treaty of European political union.
It is sometimes difficult when one is proved right, and I am sorry that I was proved right in the forecast that I gave the House in a debate on 27 November 1973. I said that we were not worried about the fact that European union was not properly defined, but that we did not want to get to that destination however it was defined. I said it was not good enough to be told that we would be fairly slow in getting there, because we did not want to get there at all. We wanted to take an entirely different direction.
When the House debated European union in a minor way in 1982, the Minister's predecessor, who is now the Home Secretary, gave the House a number of assurances after fears were expressed about the Genscher-Colombo proposals, the German-Italian proposals, which were the precursors of statements about European union in the Stuttgart declaration. I have not time and I do not wish to bore the Committee by quoting all that he said. Suffice to say that the right hon. Gentleman the Home Secretary, who was then a Minister of State, Foreign Office, said of European union:
It is not the creation of any new institution or increases in the formal powers of existing institutions." — [Official Report, 17 June 1982; Vol. 27, c. 1103.]
He was wrong, because as we have shown conclusively during the course of our debates in Committee, the Bill gives some extra powers to some Community institutions in defiance of assurances previously given to the House.
My final point is that neither this nor any Government have a mandate for achieving European union, however it is defined. Assurances to the contrary were given to the British people in 1972 and in the referendum campaign in 1975. They were also given in The "Britain in Europe; Yes" campaign which I think the right hon. and learned Member for Hexham (Mr. Rippon) fully supported. I challenge the right hon. and learned Gentleman to deny that. Of course he cannot, because it is a fact. There was nothing in any general election manifesto by any of Britain's political parties about European union.

Mr. David Crouch: This is a fairly late hour, but I have never heard so much rubbish during about 20 years in the House of Commons. Is the hon. Gentleman saying that there should be no unity in Europe? It is rubbish when we hear from the Opposition Benches, and even from the Opposition Front Bench, that there should not be unity in Europe. I have never heard such rubbish in my life.

Mr. Deakins: The hon. Gentleman has not been present for our debates and he may not have heard all the arguments. I am under great pressure of time—

Mr. Crouch: I am sick and tired of this rubbish.

Mr. Deakins: I do not have the time to take issue with the hon. Gentleman. If he does not like what I am saying, he can leave the Chamber.

Mr. Crouch: I shall not leave.

Mr. Deakins: Then the hon. Gentleman can stay and listen. He may find when he leaves the Chamber that he is rather better informed than he was when he entered it.

Mr. Crouch: It is rubbish.

Mr. Deakins: European union will not be achieved by stealth.

Mr. Crouch: Rubbish!

Mr. Deakins: That is the issue before us. There will be a gradual erosion of national sovereignty within the terms of the Bill and that will not be accompanied by any public debate. I am talking about debate outside the House. There is a deliberate confusion — I hope that the Minister of State will not take this approach when she replies — between political co-operation and political integration. Her predecessor tried to confuse the House by taking that approach before he moved on to become Secretary of State for Northern Ireland. We on the Opposition Benches support European co-operation and we are against European integration, and that is what political union is ultimately all about. It is no use the Minister of State Saying, "We see things differently." The issue does not rest with the Government alone. European union is for the 12 Governments of the Community and the federalist institutions, which are pushing more and more for closer co-operation arid integration. We shall divide the Committee on this amendment.

Mr. Cash: I have refrained deliberately from speaking during the Committee's proceedings, save for a brief three minutes, but I intervene because I attach great significance to the amendment. I declare an interest because I take my position as a Member of this place as being British first and European second. I believe that it is part of my duty as a Member to protect the interests of my constituents on these occasions.
The provisions of the amendment are important. To incorporate the preamble into the Bill has significance in terms of the interpretation of the measure as a matter of Community law, let alone as a part of United Kingdom law, and there will be an effect upon the sovereignty of the United Kingdom. We must not exaggerate the issue either way, which comes down to a matter of gearing. The interpretation that will be placed on the preamble in the courts cannot be denied, and anyone who attempts to do so will be misleading the Members of this place.
The notion of sovereignty embraces effective control. As I tried to explain in an article which appeared in The Times recently, which dealt with the way in which effective control of European matters is being conducted at the moment and as it affects Britain, there is a need for careful review. There are serious dangers that stem from a lack of accountability and a lack of control over what is taking place in Europe, which I believe impugn our sovereignty. I tabled an amendment, which was not accepted, to the effect that nothing in this measure would derogate from the sovereignty of the United Kingdom Parliament. That was not a re-run of the 1972 battle. It was an attempt to include in the Bill a counterweight to the methods of interpretation that I believe will be imported into the use of the preamble, which reaffirms the will to transfer the whole complex of relations between states into a European union. I shall refer briefly as well to the statement made

by the Select Committee on Foreign Affairs on the legal significance of the preamble to the Single European Act. It reads:
Its principal significance is as part of the context of the Treaty for the purposes of its interpretation.
It quotes the Vienna convention on the law of treaties. It clearly states in the interpretation of treaties, article 31 on the general rule, that one must consider the whole treaty, including its preamble, in determining how to define it.
We must be careful to bear in mind the 12th report of the House of Lords Select Committee on the European Community which stated:
The powers of the United Kingdom Parliament will be weakened by the Single European Act.
We must take careful note of what that important Select Committee stated.
I referred to the question of control and sovereignty. In a careful analysis by Professor Phillip Taylor a few years ago, it stated that the Eurocrats demonstrated a positive attitude about moving forward to European union. Eighty per cent. agreed that that was the direction in which they should go. Eurocrats have far too much control. I should like to see a much greater degree of retention of sovereignty in this Parliament through scrutiny by hon. Members in the Select Committee on European Legislation considering matters that come before the House. Sovereignty must reside in Parliament.
I am not against Europe, political involvement in Europe, or a degree of unity, but I am against federalism. As the Prime Minister stated unequivocally:
I do not believe in the concept of a united states of Europe … I am constantly saying that I wish they would talk less about European and political union. The terms are not understood in this country."—Official Report, 5 December 1985; Vol. 88 c. 432.]
The matter is of great importance and I await with interest what my hon. Friend the Minister has to say.

Mrs. Chalker: The right hon. Member for South Down (Mr. Powell) asked me what rights and powers, in the sense of article 2 of the European Communities Act 1972. were contained in the preamble. The preamble is included in the present legislation to the extent that it relates to the Communities simply because it is part of the Single European Act.

Mr. Budgen: What does that mean?

Mrs. Chalker: If my hon. Friend would contain himself for just a couple of moments, he might learn.
It does not mean that the preamble must confer rights and contain obligations. It does not do so, anymore than the preambles to the original Community treaties which were given effect to by the 1972 Act.
Several hon. Members asked exactly what the status of the preamble is in relation to the substantive provisions of the Single European Act. Article 31(1) of the Vienna convention on the Law of Treaties provides that treaties
shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.
Article 31(2) of the convention makes it clear that the preamble forms part of the context in which the treaty must be interpreted. In the case of the Single European Act and other treaties, the European court would generally be— —

It being one hour after commencement of proceedings on the motion, THE TEMPORARY CHAIRMAN proceeded, pursuant to the Order [1st July], to put forthwith the Question already proposed from the Chair.

The Question being put, That the amendment be made:—

The Committee divided: Ayes 42, Noes 157.

Division No. 252]
[11.15 pm


AYES


Bell, Stuart
McKay, Allen (Penistone)


Bermingham, Gerald
McWilliam, John


Budgen, Nick
Marlow, Antony


Canavan, Dennis
Nellist, David


Clay, Robert
Patchett, Terry


Cocks, Rt Hon M. (Bristol S)
Pike, Peter


Cohen, Harry
Powell, Rt Hon J. E.


Cook, Robin F. (Livingston)
Powell, Raymond (Ogmore)


Crowther, Stan
Raynsford, Nick


Dixon, Donald
Redmond, Martin


du Cann, Rt Hon Sir Edward
Roberts, Allan (Bootle)


Foot, Rt Hon Michael
Robertson, George


Foster, Derek
Shore, Rt Hon Peter


Foulkes, George
Skinner, Dennis


Fraser, J. (Norwood)
Smith, Rt Hon J. (M'ds E)


Harrison, Rt Hon Walter
Taylor, Teddy (S'end E)


Haynes, Frank
Walker, Bill (T'side N)


Hogg, N. (C'nauld &amp; Kilsyth)
Welsh, Michael


Howarth, Gerald (Cannock)
Williams, Rt Hon A.


Leighton, Ronald



Lewis, Terence (Worsley)
Tellers for the Ayes:


Loyden, Edward
Mr. Eric Deakins and


McDonald, Dr Oonagh
Mr. Nigel Spearing.




NOES


Adley, Robert
Forsyth, Michael (Stirling)


Alexander, Richard
Fowler, Rt Hon Norman


Alison, Rt Hon Michael
Fraser, Peter (Angus East)


Amess, David
Freeman, Roger


Ancram, Michael
Gale, Roger


Ashby, David
Galley, Roy


Atkins, Rt Hon Sir H.
Gardiner, George (Reigate)


Atkinson, David (B'm'th E)
Garel-Jones, Tristan


Baker, Nicholas (Dorset N)
Goodhart, Sir Philip


Baldry, Tony
Greenway, Harry


Banks, Robert (Harrogate)
Gregory, Conal


Batiste, Spencer
Griffiths, Sir Eldon


Bellingham, Henry
Grylls, Michael


Benyon, William
Gummer, Rt Hon John S


Biggs-Davison, Sir John
Hanley, Jeremy


Blackburn, John
Hargreaves, Kenneth


Blaker, Rt Hon Sir Peter
Harris, David


Boscawen, Hon Robert
Harvey, Robert


Bottomley, Peter
Hawkins, Sir Paul (N'folk SW)


Bottomley, Mrs Virginia
Hayes, J.


Bowden, Gerald (Dulwich)
Hayward, Robert


Bright, Graham
Heathcoat-Amory, David


Brinton, Tim
Henderson, Barry


Bryan, Sir Paul
Hickmet, Richard


Buck, Sir Antony
Hicks, Robert


Burt, Alistair
Hind, Kenneth


Butler, Rt Hon Sir Adam
Hogg, Hon Douglas (Gr'th'm)


Butterfill, John
Holt, Richard


Chalker, Mrs Lynda
Howarth, Alan (Stratf'd-on-A)


Chapman, Sydney
Howells, Geraint


Chope, Christopher
Hunt, David (Wirral W)


Coombs, Simon
Hunter, Andrew


Cope, John
Johnson Smith, Sir Geoffrey


Corrie, John
Johnston, Sir Russell


Crouch, David
Jones, Gwilym (Cardiff N)


Currie, Mrs Edwina
Jones, Robert (Herts W)


Dorrell, Stephen
Jopling, Rt Hon Michael


Douglas-Hamilton, Lord J.
Knowles, Michael


Dunn, Robert
Knox, David


Dykes, Hugh
Latham, Michael


Eggar, Tim
Lawler, Geoffrey


Fallon, Michael
Leigh, Edward (Gainsbor'gh)


Favell, Anthony
Lennox-Boyd, Hon Mark


Fenner, Mrs Peggy
Lester, Jim


Finsberg, Sir Geoffrey
Lilley, Peter


Forman, Nigel
Lloyd, Sir Ian (Havant)





Lloyd, Peter (Fareham)
Spicer, Jim (Dorset W)


McCurley, Mrs Anna
Stanbrook, Ivor


MacKay, Andrew (Berkshire)
Steen, Anthony


MacKay, John (Argyll &amp; Bute)
Stern, Michael


Major, John
Stewart, Ian (Hertf'dshire N)


Malone, Gerald
Temple-Morris, Peter


Maples, John
Terlezki, Stefan


Mather, Carol
Thomas, Rt Hon Peter


Maude, Hon Francis
Thompson, Donald (Calder V)


Meyer, Sir Anthony
Thompson, Patrick (N'ich N)


Moynihan, Hon C.
Thurnham, Peter


Neale, Gerrard
Townsend, Cyril D. (B'heath)


Neubert, Michael
Tracey, Richard


Oppenheim, Phillip
Trippier, David


Ottaway, Richard
Twinn, Dr Ian


Page, Sir John (Harrow W)
van Straubenzee, Sir W.


Page, Richard (Herts SW)
Vaughan, Sir Gerard


Portillo, Michael
Wakeham, Rt Hon John


Powell, William (Corby)
Walden, George


Raison, Rt Hon Timothy
Waller, Gary


Renton, Tim
Wardle, C. (Bexhill)


Rhodes James, Robert
Warren, Kenneth


Rhys Williams, Sir Brandon
Watts, John


Rippon, Rt Hon Geoffrey
Wells, Bowen (Hertford)


Roe, Mrs Marion
Wheeler, John


Rowe, Andrew
Whitfield, John


Rumbold, Mrs Angela
Wilkinson, John


Sainsbury, Hon Timothy
Wolfson, Mark


Sayeed, Jonathan
Wood, Timothy


Shelton, William (Streatham)
Yeo, Tim


Shepherd, Colin (Hereford)



Sims, Roger
Tellers for the Noes:


Smith, Tim (Beaconsfield)
Mr. Archie Hamilton and


Speed, Keith
Mr. Tony Durant


Spencer, Derek

Question accordingly negatived.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3

PROVISIONS RELATING TO EUROPEAN ASSEMBLY

The Second Deputy Chairman (Sir Paul Dean): We now come to amendment No. 46.

Mr. J. Enoch Powell: In the light of pressure on time, and the fact that clause 3(4) goes to the root of the Bill and raises matters that can be debated on the question, That the Bill be now read the Third time, I do not propose to move amendment No. 46.

Clause 3 ordered to stand part of the Bill.

Clause 4 ordered to stand part of the Bill.

Schedule agreed to.

Bill reported, without amendment.

Motion made, and Question proposed, That the Bill be now read the Third time.—[Mrs. Chalker.]

Mr. Spearing: As the right hon. Member for South Down (Mr. Powell) said, the Bill arises from section 2(1) of the European Communities Act 1972 which states:
All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression 'enforceable Community right' and similar expressions shall be read as referring to one to which this subsection applies.
No part of any Act of this Parliament has had such a draconian force in law. The Single European Act, which


will be incorporated as a treaty under the section of the law that I have just quoted, will change the constitution of this country—I fear, irrevocably—until a future Government change the Act upon which its foundation is based.
The Single European Act is, in effect, a European Bill. If it is to be understood thoroughly, it must be taken as a Bill and read with the treaty of Rome of which it is part. Together, they form the written constitution of the new political constellation of which we are part and to which we are drawn closer to the centre. But, having been drawn closer to the centre, we find that our powers to decide for ourselves what we do in the United Kingdom are consequently diminished.
I believe, as do some Conservative Members — the hon. Member for Canterbury (Mr. Crouch) ——

Mr. Crouch: Not all.

Mr. Spearing: One minute.
When a decision is made, by consent of the House or by Governments in an international forum getting together on matters related to a specific topic and agreeing of free will—not because it is linked with another issue —I would probably say, "Hear, hear. We must do that. We must go along with it." That it is the true path to international understanding. It is the true path to cooperation, without letting any of the powers of the House disappear or be prejudiced or undermined.
That is not what we have agreed to in respect of the Bill. In agreeing to the Single European Act, we have agreed to extend the scope and power of the European Community to legislate and to tax. Earlier we had a brief debate on the environment and technology. The debate on the environment centred on water and farmers. The Committee did not realise that the scope inherent in the vires of the European Economic Community will concern any aspect of the environment, especially that relating to the harmonised internal market. I forsee a spate of legislation before the House and the Scrutiny Committee.

Mr. Cash: Will the hon. Gentleman give way?

Mr. Spearing: I should prefer not to give way, because many hon. Members wish to speak. I hope that the hon. Gentleman will catch Mr. Deputy Speaker's eye later.
It has been argued that the passage of the legislation will not change the balance of power in the institutions of the European Community. The Minister of State made that point. I was going to call her a right hon. Lady. She should he a right hon. Lady. She signed a treaty on this country's behalf without being a Privy Councillor. It was unfair to impose that act on the hon. Lady, because she was fresh in the job.
Parliament's ability to legislate on matters of law in the United Kingdom will be diminished, if only because the proportion of law that comes from Brussels rather than Westminster will increase, and the proportion of law that comes from Westminster will inevitably decrease. The legislation will not, therefore, be enacted by the Crown in Parliament. When people take law qualifications, they learn something of our constitution and are taught, so I am told, that the highest authority in the land is the Crown in Parliament. The three aspects of Parliament meet together on occasions—such as the happy occasion last week—Commons, Lords and monarch.

Mr. J. Enoch Powell: indicated dissent.

Mr. Spearing: Perhaps the right hon. Gentleman corrects me. As I understand it, the Crown in Parliament has three parts. Legislation that does not pass through those three parts of Parliament and does not "originate" —I use that word specifically—in the Crown in Privy Council is not law passed by the Parliament and does not receive the Royal Assent.
So far, the Bill has been passed by one of the three. Almost inevitably, the power of the Crown in Parliament cannot help but be diminished. There will be an increase in the number of Acts of Parliament which Her Majesty is invited to sign, which come ab initio from Westminster and the House. Already we are beginning to he faced with Bills that we have to pass because of the decisions of the European Court and our obligations under the European Communities Act 1972. There will be an increase in the number of statutory instruments and in the amount of legislation coming direct from the European institutions, bypassing the Crown and Royal Assent. To that extent, the sovereignty of this House, the sovereignty of Her Majesty the Queen and the sovereignty of the British people will be also diminished.

Mr. Marlow: Future generations, when they look back over the past few weeks, will be amazed at the prominence that has been given to events in South Africa as compared with the prominence given to the Single European Act and the Bill. That is not to say that events in South Africa are not complex, tragic and important. That is not to say that the Government — and indirectly this House — do not have some influence on the events in Southern Africa and that these events will not have some effect on the interests of our constituents. However, the Single European Act is a matter of high significance, of higher significance probably than any three major Bills passed through the House at any one time.
The Bill is about a movement of powers to European institutions. Many of us — despite what those who disagree with us would say—are keen to see European co-operation and to see Europe working together in various areas where it is appropriate for Europe to work together. We are even keen to see proper and effective European institutions. Those who take the opposite view to that ought to realise that harmonisation does not always bring about harmony.
Before we pass the Bill, perhaps we ought to consider the institutions that exist at present and consider how the powers are being used. The first institution that we ought to consider carefully is the Commission with its great powers for the initiation of policy and its increasing powers that we have discussed today. Everything starts from the Commission. Day in and day out, the Commission works on Community policy. The Commission, because of its position, because it is ever-present and because it has a sense of direction and favours European unity, has the ideas which will be fulfilled in the long run. However, the Commission is a bureaucracy. In this country, we wish to be ruled by democracy but increasingly, as we transfer these powers, we shall be ruled by a bureaucracy. I am a democrat and I wonder at times if we all are.
The next institution that bears close scrutiny is the European Court. As we discussed in the previous debate, the preamble and many other parts of the Bill will give greater powers to the European Court. The laws of this


country and of our people will no longer, in these respects, be made by their elected representatives. The laws will be made by judges, not politicians, the people who would have to seek votes. But now the legal experts, judges in a foreign country, will make laws for British citizens. Of course, some people will say that a great part of the Bill is that it will enhance the status of the European Assembly and that that will give us more control over the European institutions. Do we really believe that? Do we really believe that when people voted in the last European Assembly elections, they voted according to how the people they elected would resolve the problems and serve the interests of the people of this country? If they did so, I believe that they were misled. They voted basically on the party label, Labour or Conservative.
The people who are elected to that institution are essentially federalists and they decide policy, not according to the interests of their constituents — may be they should — they decide policy on the basis of bringing together European unity and a federal Europe and above all, on the basis of increasing powers for the institution that they serve. We should be very wary of that in this Parliament.
We are giving powers to institutions that have had powers for some time. They have had powers over the CAP. Although my hon. Friend the Minister was frank if she had been more frank she would have told us that the institution, have not yet met with any degree of success over the CAP. She told us how much worse the problems would be if action had not been taken, but she did not tell us that this year's surpluses are worse than last year's, that last year's were worse than the year before that and that whatever brave proposals are to be put forward, next year's will be worse than they are this year.
What success is that, when each year the situation gets worse? These institutions have had power over the Community budget. We have debated budgetary discipline long and hard and have been given commitments on the subject, yet not one scintilla of budgetary discipline has been achieved. Even so, it is suggested that we hand over more powers.

Mr. Bowen Wells: You tell them.

Mr. Marlow: My hon. Friend may feel that the whole question of the powers of this House and whether we hand them to other institutions is a matter of levity. I wonder whether his constituents think that. Mine do not.
I have two questions for the Minister. First, we are to have an extension of majority voting. How can she justify a situation in which laws affecting the United Kingdom will be made in such a way that we and Germany will have 10 votes each, each of us having about 55 million citizens, yet seven small European countries—Holland, Belgium, Denmark, Luxembourg, Greece, Portugal and Ireland—with fewer citizens in total than either the United Kingdom or Germany, will have 28 votes?
They will be able to stop happening that which we may want, but we shall not be able to stop happening that which they may want. We and Germany together, with twice their population and six times their economic power, will not be able to prevent that. How can a British Government agree to majority voting in those circumstances?
Secondly, as my right hon. Friend the Prime Minister believes that our power with the veto is of paramount importance, may we be assured that the veto is still secure?

Mrs. Chalker: Yes.

Mr. Marlow: I am grateful to my hon. Friend for that assurance. Will she enlarge on that answer and explain how it is secure?
In many respects, what is now happening represents the death knell for some of the powers of this House. It is a requiem on certain aspects of British sovereignty. The measure is nearly finished here, but the Leader of the House, when interviewed on radio last week and when asked about the future parliamentary programme, vouchsafed to the nation that if, in its discussion, a measure was truncated through the use of the guillotine in this place, it was vital that proper scrutiny occurred in the other place. We have before us a vital and underestimated by many people constitutional measure. The powers of the other place should be used to the utmost in this matter.

Mr. Foot: The Government will live to regret — I hope even to be ashamed of—having introduced this measure. That sense of regret may come a good deal more speedily than some may think, for the Bill must go to another place and they have a special obligation there to examine constitutional measures, especially when such measures are guillotined here.
I should have thought that the other place —particularly as we have heard tonight that their Lordships have decided to intervene on a major Bill affecting the royal dockyards—would be encouraged to intervene on this measure.
When I say that the Government should be ashamed about that way in which they have proceeded with the Bill in this House, that is not meant as a reflection on the Minister. All who have listened to these proceedings will pay tribute to the patience and skill that she has shown in defending the situation. She has done that without assistance from any hon. Members, including those who have spoken from the Government Benches.
The hon. Lady has done extremely well, but in the course of doing that she has damned the Bill even more. In an effort to defend what the Government are seeking to achieve by the measure, she has had to try to persuade us that it does not really involve any change in the situation that went before, and that has been her case. Of course it is not true.
I am not saying that she is seeking to mislead the House, but the hon. Lady has misled herself in the way that she has presented the matter. Greater powers can be used by the European Court and invoked by the European Assembly. The methods used and the balance between institutions within the European organisation are altered.

Mr. Butterfill: rose—

Mr. Foot: I shall not give way to the hon. Gentleman. Should the Bill be passed, those factors and developments will come into being. Then the people of this country will return to the House and ask why the House of Commons allowed such a measure to go through.
They will ask why the House of Commons allowed a European court to have such power in such circumstances, and allowed a European assembly to be transformed into a European parliament and given greater powers.
I do not believe that the hon. Lady has answered the charge why the House of Commons permitted greater powers over the imposition of taxation, which will be used later by a Government in this country. Those dangers face this country. People will look back to these debates and say that i1 is a disgrace that such a measure was forced through by a guillotine and forced through by a bovine majority that has not even been interested in the betrayal of the rights of the people of this country.

Mr. Cash: I spoke on the interpretation of the Preamble in Committee, and I should like to say now that I am deeply concerned about the manner in which legislation is enacted in Europe, and which has to be implemented by the House by virtue of the European Communities Act.
I am not against the Act or the Bill, in principle, but I feel deeply and strongly, as a member of the Select Committee on European Legislation and having witnessed the manner in which legislation is passed to us, its effect on our commerce and industry. I take the Directive on Product Liability as an example. There are other directives in which I was involved before coming to the House where I have seen livelihoods affected. That was not due to a deliberate act by civil servants or indeed by Ministers, but because people were unaware of the effect of European legislation.
In this instance the directive, which related to radiation and the implementation of measures relating to radiation, livelihoods would have been taken from many people. But for the fact that a serious attempt was made to make sure that people were aware of the implications, their livelihoods would have been taken away. That can happen in many different ways. I ask the House, when considering the Bill and European legislation, to bear in mind that to have legislation passed with the consent of the electorate implies accountability.
Accountability to whom? I spoke earlier on the question of sovereignty, which for me means effective control. In this context, when we consider the manner in which legislation is produced in Europe and the fact that it must be enacted by this Parliament by virtue of the European Communities Act, there is accountability by Ministers in theory and largely in practice.
Much of the legislation goes on without being properly considered and it has a much greater effect upon the people of this country and our commerce and industry than is commonly recognised. I plead that it is essential to scrutinise that legislation effectively in the House, and that the terms of reference of the Select Committee on European Legislation are improved.
I finish by reminding the House of some legislation that was passed recently relating to the Chernobyl disaster.
It included as its legal basis the whole of the European treaty. In other words, there was no specific power to which the Foreign Office was able to point in determining the basis upon which that legislation was to be imposed upon the people of this country. If that is the basis upon which people proceed, I think that we have an open door to legislation of any description.
It is the matter of the greatest possible importance that we ensure that sovereignty does, indeed, remain in this House, that we have effective accountability and that Ministers are fully aware of what is done in thier name by bureaucrats and civil servants who go across to Europe in the working groups and legislate on our behalf. It is

essential to maintain the democracy of this House and its sovereignty and to ensure that we do know that the legislation done in our name is known to have been done on behalf of the people of this country. If there is a gap between legislation and the electorate of the kind that I have seen developing in Europe with a volume of legislation of this complexity, I believe that Europe itself will disintegrate because it will be seen to be undemocratic and bureaucratic in the extreme.

Sir Russell Johnston: I welcome the Third Reading of the Bill. I repeat the view that I have expressed throughout the progress of it, that the changes it introduces are limited and sensible. I consider that the various examples that we have been given by anti-Community Members of terrible consequences being imposed upon us through majority voting are just plain nonsense. Again and again, whether we were discussing tax harmonisation, pollution or regional development, we were told that somehow or other, and apparently completely irrespective of political colour, these foreigners — aliens was the word much used, I thought rather offensively by the hon. Member for Newham, South (Mr. Spearing)—would get it wrong and impose unacceptable policies upon the country, not to mention what foreign judges might do.
I find this approach quite untenable; and the suggestion by some who produced this approach—that they were not really against the Community at all, but wanted to improve the Community—was totally incredible.
I felt that the Minister, with respect to her, was sometimes less robust in defending the Bill than she could have been. I suppose if one is a reasonable person, which she is, there is always a certain disposition to seek some kind of accord with critics, even if they are evidently intractable and unconvertible as is the hon. Member for Southend, East (Mr. Taylor). However, it sometimes leads one to claim that changes that one proposes do not actually make much difference at all. It is certainly my hope that the Bill will make some difference; likewise, this is the belief of nearly all other member Governments. The major difference should be a greater capacity to arrive at decisions without undue delay, far less some of the indefensible procrastinations that we have seen in the past.
Taken in conjuction with the more effective operation of the Court and the modest increases in powers of the Commission and the Parliament, this will achieve greater integration advance what I believe in, the historical welding together of the old European states and nations, and increase understanding and appreciation of our mutual dependence. As I have said before in many arguments with the hon. Member for Walthamstow ((Mr. Deakins), this will lead to a style of government in Western Europe that one can call federal quasi-federal, devolved union or whatever word one likes to use, but it means that there are a lot of things that we can do better together — oil pollution control, fishery conservation, fair competition, regional development, economic coordination and political co-operation.
This is all good. I do not believe that it reduces the rights of our citizens; I think that it enhances them, and I applaud it.

Mr. Foulkes: As we come to the end of the very sorry saga of the Bill, it is appropriate to remind the House that


the Government originally did not want the proposals now included in the Bill and in the Single European Act. The right hon. Member for Edinburgh, Pentlands (Mr. Rifkind) insisted on major reservations in Dooge, which have subsequently been abandoned. The Prime Minister petulantly opposed the inter-governmental conference, but the Government were forced into a humiliating reverse. They had reluctantly to accept some fundamental changes that they opposed to get concessions on the internal market. In an attempt to hide their embarrassment, they first tried to slip the Bill through with the minimum scrutiny and discussion. When they were rumbled by hon. Members on both sides of the House, and we started to give the Bill careful scrutiny, the Government ruthlessly wielded one of the most drastic guillotines ever.
The Bill represents the first major transfer of sovereignty from Westminster to Strasbourg and Brussels, involves increased pressure to harmonise VAT, means the establishment of a new European Court of Justice, gives additional competences to the European Community, changes the name of the Assembly to Parliament, and means a move towards greater economic and social cohesion — in other words greater European union. These are major issues that should have been considered in detail by the House. Many vital questions remain unanswered on the internal market, the effects, on employment, on insurance, procurement and company law. Many matters have not been discussed by the House. There are many implications of which the House, let alone the country, remains unaware.
The hon. Lady deserves credit, and the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) was, unusually, a little discourteous and ungenerous. She deserves credit for one thing, her diligence and stamina in piloting the Bill through single-handed —"Timless" on most occasions. We have seen some amazingly skilful footwork. I know from an unusually reliable source that is the usual phrase for a Foreign Office leak—that, like the hon. Member for Littleborough and Saddleworth (Mr. Dickens), that well-known the danseur extraordinaire, that the Minister is fond of dancing — not modern dancing, but dances such as the conga and hokeycokey. However, if she tries to divert attention from the Government's twists and turns in the Bill, and its importance, by launching into the usual sad, tired, tattered attack against the Opposition, she will do herself no credit.
No doubt, the Minister will also try to claim that the changes negotiated at Luxembourg will be good for Britain. Conservative Members should remember Fontainebleau. We were told that the agreement reached there would be good for Britain. The same claims were made then as are being made now—a great victory, a permanent solution. The reality was the opposite. No financial discipline — our contribution has become greater. We hve seen the 1·4 per cent. VAT reached, and no doubt we shall see it breached, and agriculture spending is spiralling. If that is a good deal for Britain, the English language has lost its meaning.
The Minister may also be tempted to praise the success of the Community in certain matters of concern such as vehicle standards or health. However, even if we concede that there have been some minor advances on such

matters, at what expense have they been achieved in concessions and in the horse trading in the European Parliament?
The Minister may also claim that the Government have not wavered in their commitment to the European Community, and that the habit of co-operation on foreign policy is entrenched in the European Community. The reality is entirely the opposite. We were out of step in withdrawing from UNESCO, when we cravenly left when President Reagan said jump.

Mrs. Chalker: Whas has that got to do with the Bill?

Mr. Foulkes: The hon. Lady must listen—she will have an opportunity to reply to the debate. We were told that in the Single European Act, to which she put her name, there was agreement about co-operation on foreign policy. Far from working together, the United Kingdom has been out of step. We stand alone within the Community over the raid on Libya. The Foreign Ministers of the Community were deceived by the British Foreign Secretary about that raid. We are now at loggerheads with the Community over how to deal with the apartheid regime in South Africa.
I predict that the Minister will try to take some credit for what she will describe as a great achievement—the so-called £4 billion rebate. Under the 1974–1979 Labour Government Britain's net contribution to the Community was £380 million a year. Under this Conservative Government, between 1980 and 1986 it has been over £800 million a year. In 1984–85 it amounted to £936 million and in 1987–88 the net amount that we shall pay will be £1·2 billion.
If the Single European Act is the result of what the Prime Minister described as "batting for Britain" we, like the England cricket team, need not only a change of captain but a change of team. I ask my hon. Friends to take this opportunity to vote once more on Third Reading against the Bill, and I give a pledge on behalf of the Opposition that we shall continue the fight against the Bill just as vigorously in the other place.

Mrs. Chalker: There have been nearly 40 hours of debate on the changes to the European Community treaties that will be brought about by the European Communities (Amendment) Bill. At each stage I have tried to respond to the questions that were put to me by hon. Members. I shall do so again now, if I can. If that is not possible, I shall respond in writing.
The House has to take its decision on the Bill as a whole. It was right to go through it in detail and to weigh up the implications of these changes, but we should concentrate on the material facts. However, many hon. Members have not been trying to assess the material facts, or even the implications. They returned to the 1972 debates and the 1975 referendum debates and questioned our membership of the European Community. It is right to be critical when things go wrong. However, we took the decision to enter the Community, and as one of the leading partners in the Community we should be concentrating on current issues, not fighting the battles of years ago.
I wondered for a moment why the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) referred to the hokey-cokey and then I realised that he had a copy of some, though not all, of my notes. Whether he


dances the eightsome reel with joy, or whether somebody else dances another dance, there is one thing at which he and his party are more expert than any other party in the House—their European hokey-cokey. The right foot of some Opposition Members goes in while the left foot of other Opposition Members wants to take them out. In that sense, it is the most perfect description of the Opposition's attitude towards European legislation.
In previous debates, 1 recalled again and again the decisions made by a Labour Government — the hon. Member for Walthamstow (Mr. Deakins) was a member of that Government, and must stand by the decisions that he made then—which were the foundations of the steps that we have taken over the years to reach this first amendment of the treaty of Rome.
The Labour Government played games with our membership of the Community, telling people that they would renegotiate our terms of entry, when all that they did was to renegotiate the terms of their election manifesto. The Conservative Government have not wavered and will not waver. In our 1983 manifesto, we were convinced, as we are today, that the development of the Community is vital to Britain. It is vital to cement not only a lasting peace in Europe but to end centuries of hostility. We said that we had come to office determined to make a success of British membership of the Community, and that is what we have been doing. The Bill is a further step in that direction.
Unlike the steps attempted half-heartedly by Labour Governments, this Government, under this Prime Minister, secured a lasting agreement worth more than £1,000 million to Britain this year alone. The Government have taken major steps to agricultural reform, with price reductions of nearly 1·5 per cent. three years ago increasing to more than 7 per cent. in real terms for cereals this year. Those steps are part of the process of improving the Community of which we are full and living partners.
The Government have also secured agreement that agriculture must be tackled as an international problem in the GAIT, in OECD and through discussion with major producers, but we do not deny the importance of structural funds, including FEOGA guidance, which we have been debating in the Bill. That is another important element in what we seek to do.
The Government have played their part in securing the democratic future of Spain and Portugal through membership of the Community. Anyone who takes that for granted should reflect for a moment on how our interests would be affected if there were Communist Governments in Madrid or Lisbon.

Mr. Deakins: On a point of order, Mr. Deputy Speaker. It is within the rules of order for any hon. Member speaking on the Third Reading of a Bill to mention matters that are not within the Bill?

Mr. Deputy Speaker (Sir Paul Dean): Third Reading is confined to matters that are within the Bill, but the Minister was in order. There is reference to the newer members of the Community.

Mrs. Chalker: I was about to say that European political co-operation is part of the Single European Act. Only with wider membership of the Community can European political co-operation, which is important to us, come within our grasp. The hon. Member for

Walthamstow is right to say that it is not mentioned in the Bill, but since the Bill implements the Single European Act—

Mr. Deakins: Parts of it.

Mrs. Chalker: Since the Bill implements parts of the Single European Act, it is covered.
As a result of the Bill, the Government will take decisions, whether on animal health or on research and development, that benefit not only Britain but the entire internal market.
This is where we come to the point made by my hon. Friend the Member for Northampton, North (Mr. Marlow). Through qualified majority voting we shall succeed in bringing about sensible decisions which will not be blocked by a single member state. Such decisions have been blocked in the past, often by nations not even interested in the matter in question. We want changes in the internal market because we want to open up the possibilities for new enterprise and new work.
My hon. Friend the Member for Northampton. North is anxious about the blocking minority. We went through all that during the debate on one of the amendments. We have sought to make progress and have enshrined in the Bill the progress that we have sought and the issues upon which we have sought it, that is, qualified majority voting for the completion of the internal market, with proper safeguards in the areas of human, animal and plant health, and in the areas of fiscal changes, the movement of people, and the rights and interests of employees.

Mr. Peter Shore: What about the veto?

Mrs. Chalker: I shall come to the veto in a moment. My hon. Friend the Member for Northampton, North is worried that small nations might combine against us. We have now reached a degree of agreement on these issues with everybody pushing forward to bring an end to the barriers that divide Europe, where such barriers can sensibly be removed. This is the right way to go. If I thought for one moment that any of the fears in the mind of my hon. Friend the Member for Northampton, North were real, I would have told him so. I do not believe those fears are justified. He and the right hon. Member for Bethnal Green and Stepney (Mr. Shore) asked about the veto. Where important interests are at stake, discussion must be continued until unanimous agreement is reached. That is exactly what we mean by the Luxembourg compromise and that is why we shall—

Mr. Shore: That does not apply specifically to the articles that relate to the completion of the unified market. By definition, the veto power cannot apply to them because unanimity rules have been replaced by majority voting.

Mrs. Chalker: The unanimity rule has been replaced by qualified majority voting, but as we said in the detailed debates on the Bill, qualified majority voting has been agreed for those issues where we wish to make progress and where it is in Britain's interest to make progress. It is right to make progress, but we still have the right on other issues to exercise the veto where it is in the interests of Britain to do so.
When we joined the Community we accepted a treaty that was negotiated by others. In this Bill, we are asking the House to accept amendments to the treaty negotiated


by my right hon. friend the Prime Minister in British interests. She announced that treaty to the House on 5 December and when it was worked out, my right hon. Friend realised that not only were its provisions in the interests of Britain, but they would safeguard all the things that we have worked for since the Milan summit.
The amendments to the treaty of Rome contained in the Single European Act and effected by this Bill are not major changes in treaties. They do not have the constitutional implications that were inherent in the terms of our original accession to the Community. They are changes that will enable Britain to realise more fully the benefits of our membership. It is to the benefit of Britain to speed up the completion of the internal market and that will be helped by the Bill.
It is also to the benefit of Britain to have a clearly defined Community programme for research and development. The changes negotiated at Luxembourg mean a good deal for Britain. If the changes agreed by my right hon. Friend the Prime Minister have not aroused a great debate across the country, it is not because few people know about them. My right hon. Friend the Prime Minister has explained them, so has my right hon. and learned Friend the Foreign Secretary and so have I. Those who oppose the changes have written about them copiously. The reason that there has, in the Opposition's terms, been no great debate in the country about these sensible amendments to the treaty, is because the great debate is over. The British people—

It being one hour after commencement of proceedings on the motion MR. DEPUTY SPEAKER proceeded, pursuant to the Order [1st July], to put forthwith the Question already proposed from the Chair.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 149, Noes 43.

Division No. 253]
[12.14 am


AYES


Alexander, Richard
Chope, Christopher


Alison, Rt Hon Michael
Clarke, Rt Hon K. (Rushcliffe)


Amess, David
Coombs, Simon


Ancram, Michael
Cope, John


Arnold, Tom
Corrie, John


Ashby, David
Cranborne, Viscount


Atkins, Rt Hon Sir H.
Crouch, David


Atkinson, David (B'm'th E)
Currie, Mrs Edwina


Baker, Nicholas (Dorset N)
Dorrell, Stephen


Baldry, Tony
Dunn, Robert


Batiste, Spencer
Durant, Tony


Bellingham, Henry
Dykes, Hugh


Benyon, William
Eggar, Tim


Biggs-Davison, Sir John
Fallon, Michael


Blackburn, John
Favell, Anthony


Blaker, Rt Hon Sir Peter
Fenner, Mrs Peggy


Boscawen, Hon Robert
Finsberg, Sir Geoffrey


Bottomley, Peter
Forman, Nigel


Bottomley, Mrs Virginia
Forsyth, Michael (Stirling)


Bowden, Gerald (Dulwich)
Fowler, Rt Hon Norman


Bright, Graham
Fraser, Peter (Angus East)


Brinton, Tim
Freeman, Roger


Bryan, Sir Paul
Gale, Roger


Buck, Sir Antony
Galley, Roy


Burt, Alistair
Gardiner, George (Reigate)


Butcher, John
Garel-Jones, Tristan


Butterfill, John
Goodhart, Sir Philip


Cash, William
Gregory, Conal


Chalker, Mrs Lynda
Griffiths, Peter (Portsm'th N)


Chapman, Sydney
Grylls, Michael





Gummer, Rt Hon John S
Raison, Rt Hon Timothy


Hamilton, Hon A. (Epsom)
Renton, Tim


Hanley, Jeremy
Rhodes James, Robert


Hargreaves, Kenneth
Rhys Williams, Sir Brandon


Hawkins, Sir Paul (N'tolk SW)
Rippon, Rt Hon Geoffrey


Hayes, J.
Roe, Mrs Marion


Hayward, Robert
Rowe, Andrew


Heathcoat-Amory, David
Rumbold, Mrs Angela


Hickmet, Richard
Sayeed, Jonathan


Hind, Kenneth
Shelton, William (Streatham)


Hogg, Hon Douglas (Gr'th'm)
Shepherd, Colin (Hereford)


Holt, Richard
Smith, Tim (Beaconsfield)


Howarth, Alan (Stratf'd-on-A)
Speed, Keith


Howells, Geraint
Spencer, Derek


Hunt, David (Wirral W)
Spicer, Jim (Dorset W)


Hunter, Andrew
Stanbrook, Ivor


Hurd, Rt Hon Douglas
Stern, Michael


Jenkin, Rt Hon Patrick
Stewart, Ian (Hertf'dshire N)


Johnson Smith, Sir Geoffrey
Temple-Morris, Peter


Johnston, Sir Russell
Terlezki, Stefan


Jones, Gwilym (Cardiff N)
Thomas, Rt Hon Peter


Jones, Robert (Herts W)
Thompson, Donald (Calder V)


Jopling, Rt Hon Michael
Thurnham, Peter


Knowles, Michael
Townsend, Cyril D. (B'heath)


Knox, David
Tracey, Richard


Latham, Michael
Trippier, David


Lawler, Geoffrey
Twinn, Dr Ian


Leigh, Edward (Gainsbor'gh)
van Straubenzee, Sir W.


Lennox-Boyd, Hon Mark
Vaughan, Sir Gerard


Lester, Jim
Wakeham, Rt Hon John


Lilley, Peter
Walden, George


Lloyd, Sir Ian (Havant)
Waller, Gary


Lloyd, Peter (Fareham)
Wardle, C. (Bexhill)


McCurley, Mrs Anna
Warren, Kenneth


MacKay, John (Argyll &amp; Bute)
Watts, John


Malone, Gerald
Wells, Bowen (Hertford)


Mather, Carol
Wheeler, John


Maude, Hon Francis
Whitfield, John


Meyer, Sir Anthony
Wilkinson, John


Moynihan, Hon C.
Wolfson, Mark


Nicholls, Patrick
Wood, Timothy


Oppenheim, Phillip
Yeo, Tim


Ottaway, Richard



Page, Sir John (Harrow W)
Tellers for the Ayes:


Page, Richard (Herts SW)
Mr. Tim Sainsbury and


Portillo, Michael
Mr. Michael Neubert.


Powell, William (Corby)





NOES


Budgen, Nick
Patchett, Terry


Canavan, Dennis
Pike, Peter


Clay, Robert
Powell, Rt Hon J. E.


Cocks, Rt Hon M. (Bristol S)
Powell, Raymond (Ogmore)


Cohen, Harry
Prescott, John


Cook, Robin F. (Livingston)
Proctor, K. Harvey


Corbyn, Jeremy
Raynsford, Nick


Crowther, Stan
Redmond, Martin


Deakins, Eric
Roberts, Allan (Bootle)


du Cann, Rt Hon Sir Edward
Robertson, George


Foot, Rt Hon Michael
Shore, Rt Hon Peter


Foster, Derek
Skinner, Dennis


Foulkes, George
Smith, C.(lsl'ton S &amp; Fbury)


Fraser, J. (Norwood)
Smith, Rt Hon J. (M'ds E)


Harrison, Rt Hon Walter
Spearing, Nigel


Haynes, Frank
Taylor, Teddy (S'end E)


Hogg, N. (C'nauld &amp; Kilsyth)
Walker, Bill (T'side N)


Howarth, Gerald (Cannock)
Welsh, Michael


Leighton, Ronald
Williams, Rt Hon A.


Lewis, Terence (Worsley)



Loyden, Edward
Tellers for the Noes:


McKay, Allen (Penistone)
Mr. John McWilliam and


Marlow, Antony
Mr. Don Dixon.


Nellist, David

Question accordingly agreed to.

Bill read the Third time, and passed.

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committee on Statutory Instruments, &amp;c.).

SOCIAL NEED (NORTHERN IRELAND)

That the draft Social Need (Northern Ireland) Order 1986, which was laid before this House on 20th May, be approved. —[Mr. Durant.]

ROAD RACES (NORTHERN IRELAND)

That the draft Road Races (Northern Ireland) Order 1986, which was laid before this House on 10th June, be approved.[Mr. Durant.]

APPLE AND PEAR DEVELOPMENT COUNCIL

That the draft Apple and Pear Development Council Order 1986, which was laid before this House on 26th June, be approved.—[Mr. Durant.]

TRAFFIC WARDENS

That the draft Functions of Traffic Wardens (Amendment) Order 1986, which was laid before this House on 30th June, be approved.—[Mr. Durant.]

HOVERCRAFT

That the draft Hovercraft (Civil Liability) Order 1986, which was laid before this House on 4th July, be approved. —[Mr. Durant.]

Question agreed to.

University College, Swansea

Motion made, and Question proposed That this House do now adjourn.—[Mr. Durant.]

Mr. Alan Williams: I would like to take this opportunity to draw attention to the problems facing University college, Swansea, and the university of Wales. The college in my constituency is on one of the most delightful campuses anywhere in the country and it has an extremely good academic record. However, it is in a state of complete demoralisation. The college has already endured cuts over the past five years —quite severe cuts for a small college—and over 30 of the academic posts have already gone.
The college had been warned, as had other universities, that a successive round of 2 per cent. annual cuts lay ahead for the college. That would have been a severe enough blow, but, out of the blue, it was told of the latest massive University Grants Committee cut. That cut was portrayed by the Parliamentary Under-Secretary of State for Wales, who does not seem to quite understand these things, as a cut of only 0·5 per cent., carefully ignoring the fact that when inflation is taken into account the cut actually becomes 5·5 per cent. In cash terms, the university now has to save £850,000 during the next academic year.
It is worth noting that the average cut in Wales at university level has not only been higher than in Scotland, but has been much higher than the average in England. When the UGC cuts were first announced it was feared that compulsory redundancies would be necessary at academic and non-academic level. As the Minister will appreciate, the prospect of further redundancies in one of our major employers, in a city that already suffers from abnormally high unemployment, was regarded with considerable alarm, especially as the university is at a financial disadvantage because the loss of industry that there has already been in the area limits its ability to find industrial sponsors.
At least we have now been told that there is a possibility that the cuts can be accommodated without compulsory redundancies. They can be accommodated by natural wastage, which is a nice way of saying that we do not fill the job again, so jobs are lost in the area anyway, and possibly by voluntary redundancy, if enough people come forward and offer to give up their jobs. If not, I assume that we are back to the situation where compulsory redundancy may be under consideration.
Whichever way the matter is resolved, we are at the end of the road for the college after so many years of cuts. We are now at the limit of the cuts that the university can take without there being severe redundancies. Even if we achieve this round of cuts without compulsory redundancy, the effects will still be severe on some of the lowest-paid people who work on the campus. Many people do non-academic work there. For example, the National Union of Public Employees tells me that a decision to save on cleaning work in the university by cutting four and a half hours per person off the working week, which may not sound severe when one first considers it, is put in a different perspective when one realises that 100 cleaners on that campus work only 19 hours in the first place. In losing four and a half hours, they will be losing a quarter of their income, even if they manage to save their job. Also because


they will be below 19 hours, they will lose their national insurance, and their employment and redundancy protection.
The university is having to make severe cuts in its structure. We are losing the department of oceanography and the economic history department, the only separate economic history department in the whole of Wales. We are losing our drama unit. There is to be a 50 per cent. cut in the Taliesyn arts centre on a budget of £120,000, which is made even more severe by the fact that it will also lose some of its bread and butter income, because the closure of the drama unit will mean that it loses the productions that the drama unit previously put on. Already, it is facing the need for cancellation of contracts for events that were due to take place in the next two terms, and is having to consider scrapping programes for exhibitions in the arts centre.
The arts centre manager assures me that the cuts are so severe that he will barely be able to meet the wages of a skeleton staff at the centre, yet that centre is important because, in addition to its general contribution to the cultural life of Swansea and the surrounding areas, it is a focal point in south-west Wales for Welsh language activities, and has a co-ordinated programme to help local school examination candidates with their set text work. To try to make up the money that it will lose as a result of the UGC cuts, it will have to convert its operations to that of yet another conference centre. It will be one more competitor for the already limited number of conference engagements available.
In a perverse way, to add to an already severe position for the centre, it now faces the possible crippling demand from the Welsh Arts Council for a refund of part of a capital grant of £90,000 because the grant was provided in the first instance for the building to operate as a theatre.
The whole exercise in relation to Swansea and the University of Wales as a whole is based on serious misunderstandings. First, there is a misunderstanding of the nature of the role of the University of Wales. It is deliberately a federal structure. As the Minister may have been told, it was set up, not by great endowments and charitable funds or Government money but by the collection of pennies from the people of Wales. They were determined that they would have their own national university. In order to ensure that the facilities were available to the maximum number of people in Wales, it was decided to organise the university on a federal basis. Thus there is a series of colleges, each of which is small, but they need to be widely diversified in the courses that they offer. Because they are small, any changes in financing—even small changes—quickly affect viability. Because they are small, they have been at a disadvantage in the latest round of assessments by the UGC. Their size has exacerbated the problem of research financing. The research criterion has been used by the UGC vastly to the disadvantage of the Welsh university colleges.
The second misunderstanding is about the interrelationship of departments within any one college. Increasingly, youngsters want to study joint honours courses. They do not want all their academic and intellectual eggs in one basket. They want flexible choices to be available to them. If the number of departments within a university is limited, the range of options available to students is reduced, perhaps deterring

students from attending that university. The position is a little worse in Wales because of the way in which part 1 of a degree course is organised. A wide range of choice is required in the first instance.
One can demonstrate the problem by referring to the loss of the drama unit. It will be bad enough to lose the drama unit, but inevitably the English department will be hit. There is a tendency for students to take drama with other English studies. I believe that when Bangor university cut back on classics, it also lost enrolments in English departments because of the tendency of young people to link the two subjects.
The University of Wales is a major central Welsh national institution. It is part of our national, cultural and educational inheritance. It is no good the Secretary of State for Wales trying to wash his hands of it. It must be recognised that his reputation as the Welsh Secretary is inevitably linked to what happens to our university. I find it disturbing that he has been, at best, ambivalent, and more aptly evasive, in his responses to the university's future.
I asked the Secretary of State whether he would allow me to take a deputation from University College, Swansea, to meet him. He was unable to agree. He said that responsibility rested with the Department of Education and Science. That would have been fine if he had said that he had no responsibility in that context. However, when we had a debate on higher and continuing education on 25 June, the Parliamentary Under-Secretary of State for Wales—the hon. Member for Conway (Mr. Roberts)— trying to show the depth of concern that he and his right hon. Friend have for the university, said:
We keep in close touch with the UGC to ensure that Welsh needs are fully taken into account—
On the basis of the review, they are not making a good job of it. He continued:
My right hon. Friend the Secretary of State and I met the chairman of the UGC recently to discuss next year's allocation—".—[Official Report, 25 June 1986; Vol. 100, c. 414.]
The Welsh Office must make up its mind. It cannot, when it suits it, say, "It is nothing to do with us; it is someone else's responsibility", and try to win dubious applause in Wales by pretending that it is taking action when, in fact, it ducks for cover as soon as it is asked to take responsibility. It is no good trying to evade the fact that, in Welsh eyes, the Secretary of State for Wales and his reputation are closely linked to the future of the university colleges of the principality.
When the Secretary of State saw the Association of University Teachers recently—he will see the AUT, but apparently he will not see his parliamentary colleagues — he advocated a collegiate approach based on small colleges each of which would concentrate on areas of excellence. But that fails completely to recognise the departmental relationship and the need for breadth of choice and linked choices to which I referred. The vision of the Secretary of State is false and too restrictive. It is a formula for low enrolment. As numbers become smaller, income will become smaller, and the university will be pushed further on the downward spiral.
On 25 June, the Parliamentary Under-Secretary of State for Wales—the hon. Member for Conwy— said that the UGC had made a "special allocation", recognising the needs of the university in relation to the Welsh language. If our allocation is already worse than those in Scotland or England, even with a special allocation, how


bad would it have been without that special allocation? Our position would surely have been worse. Is not the Secretary of State for Wales defending our university at all? Does he accept that it should not be among the most severely penalised of all the universities? I understand that the Secretary of State for Education and Science has asked the UGC to review the financial position of the Scottish universities. We expect at least the same for Wales. We expect the UGC to consider the Welsh position again, bearing in mind the unique role played by the university of Wales in the context of Welsh national aspirations and life. If we do not get this second look, we shall want to know why the Secretary of State for Wales seems to have so little influence with the Government and his colleagues in the Department of Education and Science.

The Parliamentary Under-Secretary of State for Education and Science (Mr. George Walden): I listened with interest to the statements by the right hon. Member for Swansea. West (Mr. Williams) about University college, Swansea, the funding of the university of Wales and universities generally. He set out his case with his usual diligence, and I am grateful for his clear exposition of his concerns.
I sympathise with some of the right hon. Gentleman's anxieties. I hope that this does not sound frivolous, but it was while he was lecturing at Swansea that Kingsley Amis wrote "That Uncertain Feeling". I know that this is a difficult period for the whole university system, including Swansea. It is important at the start to get the debate into context. My right hon. Friend's predecessor, the former Secretary of State for Education and Science, announced on 20 May that the Government were willing to increase financial provision for the universities. That willingness is, however, clearly and reasonably dependent upon the universities committing themselves to a programme of action to improve quality and cost-effectiveness. In particular, we have told the universities that we shall be looking for evidence to demonstrate progress towards better management, improved standards of teaching, selectivity in research funding and rationalisation of small departments. We have started discussions with the UGC and the vice-chancellors on this and are aiming to reach agreement in detail on the way forward before public expenditure plans for 1987–88 and later years are finalised in the autumn.
Sceptical commentators have dismissed all that as "jam tomorrow". "I Want It Now" they say, in the words of another Kingsley Amis title, and they affect the belief that, unless the Government hand out a specified sum of hard cash now, without conditions, many universities will be on a slippery slope towards closure. That is just not so. I am glad that the right hon. Member for Swansea, West did not go that far.
I should like to take this opportunity to reassure the universities that the Government will not make statements like that made by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) on 20 May unless they intend to follow them through. There will be an increase in financial provision if universities will make progress on the changes which we have identified as necessary. The amount of the increase will be determined in the autumn. It will depend in part on the Government's decisions about relative spending priorities. The universities' case will be

greatly strengthened if there is clear evidence of their determination to press ahead with measures to reinforce quality and value for money.
The vice-chancellors have said loudly that they are seeking funds sufficient to maintain the universities' activities at their 1985–86 level. At this stage I am in no position to promise such an outcome; and my position tomorrow would be several Benches further back if I were to do that. However, we have heard what the vice-chancellors have said and what the UGC has said and I have listened carefully to the right hon. Member for Swansea, West this evening and noted his remarks about his institution.
Most of my remarks relate to the changes to which we hope the universities will commit themselves. I would like to spell these out in more detail and relate them to some of the points made by the right hon. Gentleman about University college, Swansea. First, I would like to consider management.
The Jarratt committee on efficiency in universities reported in March last year. It did not find that universities were gnerally wasteful or that there were particular areas in which major economies could be made overnight without any effect on universities' teaching and research activities. But it did conclude that throughout the university system there was scope for improvements in management both to ensure that full value could in future be gleaned from the large sums of public money involved and to make the system more effective in responding to the changing needs of the nation in the fast-changing world of the late 20th century.
Some of those who are concerned about these matters were, I know, worried last summer and autumn about the silence with which much of the university world appeared to have received Sir Alex Jarratt's report. A good part of the explanation for that seems to have been simply that most universities were heavily preoccupied with the preparation of their submissions for the UGC's planning exercise. Since then we have heard a good deal about deliberations within universities about these matters. Many, perhaps most, universities have by now given careful consideration to the central recommendations about the need for streamlined, responsive management structures with clearly identified levels of decision-making and responsibility. Certainly, I know that University college, Swansea has.
The Department has heard rather less about the attention being given to the more detailed recommendations from the Jarratt exercise — on financial management, purchasing, building maintenance, and the use of space.
Let me turn now to the question of teaching standards. As hon. Members know, the UGC's recent grant allocations were not based — even in part— on an assessment of teaching quality in universities. I fully recognise that such assessments are very difficult, but I hope that the UGC might be able to make some moves in that direction over the next few years. I assume that the right hon. Member would share that hope.
However, whilst UGC involvement in that way would be a useful lever, real action to sustain high quality teaching must be centred within each university. There are already a number of promising signs. Later today the CVCP will be publishing the final report of Professor Reynolds' working group on the maintenance of academic standards. I understand that it includes much valuable


advice and guidance for universities on matters such as the effective use of external examiners. A few weeks ago the vice-chancellors circulated draft guidance on the training needs of university academic staff. These are important steps and, if universities respond as suggested, significant improvements seem likely. But, to my mind, the greatest promise lies in the talks which the vice-chancellors have been having with the Association of University Teachers about the introduction of more systematic appraisal for university lecturers. Those talks are at an early stage but I am encouraged by what I have heard of how this difficult question is being addressed.
This brings me on to selectivity in research funding and the appraisals made by the UGC of each university's research strength. I have discussed this with many experienced and knowledgeable people in higher education. No one has yet challenged the principle. I admit, though, that most of those with whom I have spoken, whilst agreeing that the UGC's assessments were broadly right, disagree with the ratings given to one or two departments which they know well. Perhaps not surprisingly, in all such cases they believe that the department concerned deserves a higher rating. It may reassure them, and hon. Members, to know that these ratings are not cast in stone for all time. The UGC will he keeping them under review and refining its procedures by experience. However, I must state at this point that I am not aware of any undertaking by the UGC to review the Scottish position. It is possible that I may have missed something but I would hope that I have not. I cannot give any assurance of the kind requested by the right hon. Gentleman.
University college, Swansea did not fare as well as some other universities in these research ratings. Indeed, the UGC has told the college that the main reason why it will suffer a cut in grant of 0·5 per cent. next year, although I accept the right hon. Gentleman's point about financial reality was the committee's selective distribution of resources in support of research strength. That does not mean that there is no high quality research at Swansea. On the contrary, the UGC assessed research in chemical engineering, civil engineering, electrical and electronic engineering, social anthropology, sociology, German, history, and philosophy as of above average quality. This was, however, more than counter-balanced by the below average ratings given to research in 10 other subject groupings. As in other universites, there are some hard questions for Swansea to address. A central concern may be whether academic developments in the coming years should involve some increased concentration on areas of strength.
Such a concern links with the fourth area of change which the Government have identified—the rationalisation of small departments. The UGC has already begun a programme of rationalisations across the country as a whole. Proposals for small departments involved in the teaching of Scandinavian languages and Italian have already been announced. More minority subjects are in the pipeline and the UGC's programme will progressively move towards tackling some of the large subject areas.
But the UGC cannot act alone. Much of the impetus must come from within universities. That is why I was pleased to hear that the University of Wales has established a rationalisation committee and that the Welsh

colleges will be participating in a careful review of whether the present distribution of subject provision can be bettered.
Our other great federal university, London, has grasped the nettle in recent years and committed itself to major restructuring. Much of that is now complete. No one would pretend that it was easy; there has undoubtedly been trauma for many of those involved. But few would deny that London university and its constituent colleges are stronger as a result. I wish the University of Wales well in treading the path of rationalisation.
The fifth part of our four-legged programme for improvements is academic pay. The AUT and CVCP are currently working up detailed proposals to put to the Department this summer. Our willingness to consider making extra funds available on this front will depend greatly on the readiness of the universities and university lecturers to agree a new pay structure which provides greater flexibility and helps the recruitment and retention of staff of appropriate quality.
The right hon. Gentleman was right to refer to the position of non-academic staff in universities. I have talked to a number of their representatives on my visits to universities throughout the country and I agree that their position should not be forgotten in the changes that are taking place. I am aware of the strains of readjustment on their position, and any improvement in university funding as a whole will, naturally, be to their indirect benefit, too.
Most of what I have said has focused on the future and on prospective improvements in our university system, which will be of importance to the nation and which, I know from talking to vice-chancellors, are generally regarded as necessary.
The right hon. Gentleman concentrated on the effects of selectivity on his university and on the University of Wales. I reiterate what I have told the House several times, that the UGC does not discriminate in any way between universities on grounds of location. It applies standard considerations to all universities. However, I readily acknowledge that, like all universities, University college, Swansea, faces a difficult task in containing its expenditure within the funds available, while sustaining quality and reshaping its provision in the light of developing national needs. I believe that, like other universities, it will be up to the task.
UCS is, I know, looking in the right directions. Recent developments have included pace-setting work in biotechnology — one of tomorrow's sciences—and the establishment on the Singleton park campus of the innovation centre which, as well as generating some income, should facilitate increasingly important links between academics and industry. These are worthwhile developments and show clearly that, like the Government, University college, Swansea, has its eye to the future.
The right hon. Gentleman referred to the question of small departments. Many difficult decisions will have to be taken by a number of universities in the coming years, but it is my strong impression, judging from the remarks of people within the system with whom I have talked, that there is a growing recognition that — as Professor Bernard Crick put it in a recent article, and his political persuasion is not close to mine—universities can not be department stores. So there is a general and growing recognition that there must be rationalisation of small departments, but it must be sensitively done. I believe that the UGC intends to pursue that in a sensitive way.
In conclusion, let me stress that the Government place great importance on our higher education institutions; on the universities, polytechnics and other colleges in the public sector. They make a vital contribution to the nation's economic and cultural development. Our policies are aimed at increasing that contribution and its effectiveness.
Since 1979, full-time home student numbers have increased by nearly 80,000. Our aim is to increase

participation rates for both 18 to l9-year-olds and for mature students beyond the record high levels already achieved. We are reviewing university funding levels in the light of the improvements in train in that sector. University college, Swansea, and the right hon. Gentleman's constituency should benefit from these policies as much as the rest of the country.
Question put and agreed to.
Adjourned accordingly at five minutes to One o'clock.